UNITED STATES SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

 

 

Form 20-F

 

 

(Mark One)

 

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

OR

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

For the fiscal year ended December 31, 20082011

OR

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

For the transition period from             to             

OR

¨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

Commission file number: 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.

2,371,808,0742,363,767,313 Shares, par value€2.50 each, as of December 31, 20082011

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  ¨

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  ¨    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  ¨

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 of Regulation 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  ¨    No  ¨

** 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” in Rule 12b-2 of the Exchange Act. (Check one):

 

Large accelerated filer  xþ

 Accelerated filer  ¨  Non-accelerated filer  ¨

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

 

U.S. GAAP  ¨

  

International Financial Reporting Standards as issued by the International

Accounting Standards Board  xþ

 Other  ¨

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  ¨    Item 18  ¨

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

 

 

TABLE OF CONTENTS

 

      Page

CERTAIN TERMS

  iii

ABBREVIATIONS

  iv

CONVERSION TABLE

  ivv

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

  710
  

History and Development

  710
  

Business Overview

  811
  

Other Matters

  4754

Item 4A.

  

Unresolved Staff Comments

  5565

Item 5.

  

Operating and Financial Review and Prospects

  5565

Item 6.

  

Directors, Senior Management and Employees

  6981
  

Directors and Senior Management

  6981
  

Compensation

  7592
  

Corporate Governance

  79112
  

Employees and Share Ownership Stock Options and Restricted Share Grants

  86121

Item 7.

  

Major Shareholders and Related Party Transactions

  105124

Item 8.

  

Financial Information

  105126

Item 9.

  

The Offer and Listing

  109132

Item 10.

  

Additional Information

  111133

Item 11.

  

Quantitative and Qualitative Disclosures About Market Risk

  121146

Item 12.

  

Description of Securities Other than Equity Securities

  121147

Item 13.

  

Defaults, Dividend Arrearages and Delinquencies

  121148

Item 14.

  

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

  121148

Item 15.

  

Controls and Procedures

  121148

Item 16A.

  

Audit Committee Financial Expert

  122149

Item 16B.

  

Code of Ethics

  122149

Item 16C.

  

Principal Accountant Fees and Services

  122149

Item 16D.

  

Exemptions from the Listing Standards for Audit Committees

  123149

Item 16E.

  

Purchases of Equity Securities by the Issuer and Affiliated Purchasers

  123150

Item 16F.

  

Change in Registrant’s Certifying Accountant

  123150

Item 16G.

  

Corporate Governance

  124150

Item 17.

  

Financial Statements

  126153

Item 18.

  

Financial Statements

  126153

Item 19.

  

Exhibits

  127153

 

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, 2008.2011.

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 on Form 20-F reports information primarily regarding TOTAL’s business, and operations and financial information relating to the fiscal year ended December 31, 2008.2011. For more recent updates regarding TOTAL, you may read and copyinspect any reports, statements or other information TOTAL files with the Securities and Exchange Commission. All of TOTAL’sUnited States Securities and Exchange Commission (“SEC”). All of TOTAL’s SEC filings made after December 31, 2001, are available to the public at the Securities and Exchange Commission webSEC Web site at http://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”

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

 

“ADRs”

American Depositary Receipts evidencing ADSs.

 

“ADSs”

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

 

“barrels”

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

 

“Company”

TOTAL S.A.

 

“condensate”condensates”

Light hydrocarbon substancesCondensates are a mixture of hydrocarbons that exist in a gaseous phase at original reservoir temperature and pressure, but that, when produced, with natural gas which condense intoexist in a liquid phase at normal temperaturessurface temperature and pressures associated with surface production equipment.pressure. Condensates are sometimes referred to as C5+.

 

“crude oil”

Crude oil including condensateis 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.liquids (NGL).

“Depositary”

The Bank of New York Mellon.

“Depositary Agreement”

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

 

“Group”

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

 

“hydrocracker”

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

 

“liquids”

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

“LNG”

Liquefied natural gas.

 

“LPG”

Liquefied petroleum gas.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”

Natural gas liquids consist of condensates and LPG.

“oil and gas”

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

 

“proved reserves”

Proved oil and gas reserves are the estimatedthose quantities of crude oil naturaland gas, and natural gas liquids that geologicalwhich, by analysis of geoscience and engineering data, demonstratecan be estimated with reasonable certainty to be recoverable in future yearseconomically producible from a given date forward, from known reservoirs, and under existing economic conditions, operating methods, and operating conditions,i.e.,prices and costs asgovernment 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 date the estimate is made. Prices include consideration of changes in existing prices provided only by contractual arrangements, but not of escalations based upon future conditions.estimation. The full definition of “proved reserves” whichthat we are required to follow in presenting such information in our financial results and elsewhere in reports we file with the Securities and Exchange CommissionSEC is found in Rule 4-10 of Regulation S-X under the U.S. Securities Act of 1933, as amended.amended (including

iii

as amended by the SEC “Modernization of Oil and Gas Reporting” Release No. 33-8995 of December 31, 2008).

 

“proved developed 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. Additional oilmethods or in which the cost of the required equipment is relatively minor compared to the cost of a new well; and gas expected to be obtained(ii) through installed extraction equipment and infrastructure operational at the applicationtime of fluid injection or other improved recovery techniques for supplementing natural forces and mechanisms of primary recovery are included as “proved developed reserves” only after testingthe reserves estimate if the extraction is by means not involving a pilot project or after the operation of an installed program has confirmed through production response that increased recovery will be achieved.well. The full definition of “proved developed“developed reserves” whichthat we are required to follow in presenting such information in our financial results and elsewhere in reports we file with the Securities and Exchange CommissionSEC is found in Rule 4-10 of Regulation S-X under the U.S. Securities Act of 1933, as amended.amended (including as amended by the SEC “Modernization of Oil and Gas Reporting” Release No. 33-8995 of December 31, 2008).

 

“proved undeveloped 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, but does not include reserves attributable to any acreage for which an

iii

application of fluid injection or other improved recovery technique is contemplated, unless such techniques have been proved effective by actual tests in the area and in the same reservoir. Reserves on undrilled acreage are limited to those drilling units offsetting productive units that are reasonably certain of production when drilled. Proved reserves for other undrilled units can be claimed only where it can be demonstrated with certainty that there is continuity of production from the existing productive formation.recompletion. The full definition of “proved undeveloped“undeveloped reserves” whichthat we are required to follow in presenting such information in our financial results and elsewhere in reports we file with the Securities and Exchange CommissionSEC is found in Rule 4-10 of Regulation S-X under the U.S. Securities Act of 1933, as amended.

amended (including as amended by the SEC “Modernization of Oil and Gas Reporting” Release No. 33-8995 of December 31, 2008).

 

“steam cracker”

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

 

“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”

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

 

“TRCV”ERMI”

An aggregate margin for topping, reforming, cracking, visbreaking in Western Europe developed and used internally by TOTAL’s management asERMI 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 refining margins.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  = 5,5055,447 cf of gas in 20082011(a)
    = 5,5085,478 cf of gas in 20072010
    = 5,4945,490 cf of gas in 20062009

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)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.

 

iv

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;

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(including national and international armed conflict,conflict) and trade and regulatory matters;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 aboutAbout Market Risk”.

 

v

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, 2006, 2005 and 2004.2007. 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.


SELECTED CONSOLIDATED FINANCIAL DATA

 

(M€, except per share data)  2008   2007  2006  2005  2004
(M€ , except share and per share data) 2011 2010 2009 2008 2007 

INCOME STATEMENT DATA

               

Revenues from sales

   160,331    136,824   132,689   117,057   95,325  166,550    140,476    112,153    160,331    136,824  

Net income, Group share

   10,590    13,181   11,768   12,273   10,868  12,276    10,571    8,447    10,590    13,181  

Earnings per share(a)

   4.74    5.84   5.13   5.23   4.50  5.46    4.73    3.79    4.74    5.84  

Fully diluted earnings per share(a)

   4.71    5.80   5.09   5.20   4.48  5.44    4.71    3.78    4.71    5.80  

CASH FLOW STATEMENT DATA(b)(c)

          

CASH FLOW STATEMENT DATA

     

Cash flow from operating activities

   18,669    17,686   16,061   14,669   14,662  19,536    18,493    12,360    18,669    17,686  

Total expenditures

   13,640    11,722   11,852   11,195   8,904  24,541    16,273    13,349    13,640    11,722  

BALANCE SHEET DATA(c)

          

BALANCE SHEET DATA

     

Total assets

   118,310    113,541   105,223   106,144   86,767  164,049    143,718    127,753    118,310    113,541  

Non-current financial debt

   16,191    14,876   14,174   13,793   11,289  22,557    20,783    19,437    16,191    14,876  

Minority interests

   958    842   827   838   810

Non-controlling interests

  1,352    857    987    958    842  

Shareholders’ equity — Group share

   48,992    44,858   40,321   40,645   31,608  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)(a)

  €2.28(d)  €2.07  €1.87  €1.62  €1.35

Dividend per share (dollars)(a)

  $2.91(d)(e)  $3.14  $2.46  $1.99  $1.74

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)Historical figures regarding per share information for 2005 and 2004 have been recalculated to reflect the four-for-one stock split on May 18, 2006.
(b)See Consolidated Statement of Cash Flows included in the Consolidated Financial Statements.
(c)Comparative balance sheets and cash flow information for 2004, 2005 and (in the case of cash flow information) 2006 include Arkema, which was spun off on May 12, 2006.
(d)Subject to approval by the shareholders’ meeting on May 15, 2009.11, 2012.
(e)(b)Estimated dividend in dollars includes the first quarterly interim dividend of $1.424$0.763 paid in November 2008September 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/€.
(c)The number of common shares shown has been used to calculate per share amounts.

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 on Form 20-F are expressed in euros (“euros” or “€”) or in U.S. dollars (“dollars” or “$”). For the convenience of the reader, this Annual Report on Form 20-F presents certain translations into dollars of certain euro amounts. Unless otherwise stated, the translation of euros to dollars has been made at the noon buying rate in New York City for cable transfers in euros as certified for customs purposes by The Federal Reserve Bank of New York (the “Noon Buying Rate”) for December 31, 2008, of $1.39 per€1.00 (or€0.72 per $1.00). Effective January 1, 2009, The Federal Reserve Bank discontinued the daily publication of Noon Buying Rates.

The following tables settable sets out the average dollar/euro exchange raterates expressed in dollars per€1.00 for the years indicated, based on an average of the Noon Buying Rate expressed in dollars per€1.00.daily European Central Bank (“ECB”) reference exchange rate.(1) Such rates are not 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(a)

2004

  1.25

2005

  1.24

2006

  1.26

2007

  1.37

2008

  1.47

(a)The average of the Noon Buying Rate expressed in dollars/euro on the last business day of each full month during the relevant year.

Year  Average Rate 

2007

   1.3705  

2008

   1.4708  

2009

   1.3948  

2010

   1.3257  

2011

   1.3920  

The table below shows the high and low dollar/euro exchange rates for the three months ended December 31, 2008, based on the Noon Buying Rate expressed in dollars per euro,2011, and for the first three months of 2009,2012, based on the European Central Bank (“ECB”)daily ECB reference exchange raterates published during the relevant month expressed in dollars per euro.€1.00.

DOLLAR/EURO EXCHANGE RATES

 

Period  High  Low

October 2008

  1.41  1.24

November 2008

  1.30  1.25

December 2008

  1.44  1.26

January 2009

  1.39  1.28

February 2009

  1.30  1.26

March 2009

  1.37  1.26
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)Through March 22, 2012.

The ECB reference exchange rate on March 31, 2009,22, 2012, for the dollar against the euro was $1.33/$1.3167/€.


(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

 

 

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 — Business Overview — Other Matters”, “Item 5. Operating and Financial Review and Prospects” and “Item 11. Quantitative and Qualitative Disclosures aboutAbout 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;

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 international 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 2009,2012, 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 0.15 B€0.11 billion (calculated with a base case exchange rate of $1.30$1.40 per€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.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.

We face foreign exchange risks thatHowever, 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 adversely affectbe reduced. Higher prices can also reduce demand for 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.products.

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;

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 estimated using geologicalthose reserves which, by analysis of geosciences and engineering data, to determinecan be estimated with reasonable certainty whether the crude oil or natural gas into be economically producible — from a given date forward, from known reservoirs, is recoverableand under existing economic conditions, operating methods, and operating conditions.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 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.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. TheyIn 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 which may cause our proved reserves estimates to be adjusted downward, or actual production to be lower than the amounts implied by our currently reported proved reserves, include:

 

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 buyback contracts;risked service contracts and other contractual terms;

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

the quality and quantity of our geological, technical and economic data, which may prove to be inaccurate;

the actual production performance of our reservoirs; and

engineering judgments.reservoirs.

Many ofOur 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 assumptions andor variables involved in estimating reservesthat are beyond our control and may prove to be incorrect over time. Results of drilling,

testing and production after the date of the estimates may require substantial downward revisions in our reserve data. Any downward adjustment would indicate lower future production amounts, and maywhich 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/Far EastAsia-Pacific and South America. Approximately 33%28%, 18%24%, 11%10% and 10%8%, respectively, of our 20082011 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 the Far East,Asia-Pacific, Indonesia has suffered the majoritysome 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 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.

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 explosions, fires, accidents, equipment failures or leakage of toxic products or emissions or discharges into the air, water or soil, 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 oil or of 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 oil or 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 (for example, in tropical forests or in a marine 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 Refining & Chemicals and Supply & Marketing segments 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.

Contractual terms may provide for indemnification obligations, either by TOTAL in favor of third-parties or by third-parties for TOTAL’s 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. 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 is in line with industry practice, we are not insured against all possible risks.

We maintain insurance to protect us against the risk of damage to Group property and/or business 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, 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.

We are exposed to risks regarding safety and security of our operations. Our workforce and the public are exposed to risks inherent to our operations that potentially could lead to injuries, or 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 concerns of 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.

If our established financial reserves prove not to be adequate,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;

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 oversightRegulatory measures designed to address climate change and control. 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 imposition of specific drilling obligations;

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.

With respect to Iran, the United States adopted legislation in 1996 implementing sanctions against non-U.S. companies doing business in Iran and regulations currently impose economic sanctions on these countries.

UnderLibya (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 1996 (as amended, “ISA”), which implements sanctions against Iran with the objectiveUnited States is authorized to initiate an investigation into the activities of denying it the ability to support acts of international terrorism and fund the development of weapons of mass destruction, investments of $20 million or more in any 12-month period in the petroleum sectornon-U.S. companies in Iran are prohibited, and may lead to a request for the possible imposition of sanctions (from a list that includes denial of financing by the U.S. Export-Import Bank, and limitations on the amount of loans or credits available from U.S. financial institutions).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 any 12-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 in Iran.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. However,

In November 1996, the Council of the European Union Council Regulation No. 2271/96 prohibitsadopted regulations which prohibit TOTAL from complying with any requirement or prohibition based on or resulting

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

In each of the years since the passage of ILSA (now ISA)and until 2007, TOTAL made investments in Iran (excluding South Pars) in excess of $20 million.million (excluding the investments made as part of the development of South Pars). Since 2008, TOTAL’s activitiesposition has consisted essentially in Iran are currently limited mainly to the implementationbeing reimbursed for its past investments as part of two buyback contracts signed between 1995 and 1999 for twowith respect to permits on which the Group is no longer the operator. As a result, TOTAL’s involvement consists essentially of being reimbursed for its past investments. In 2008, TOTAL’s2011, TOTAL had no production in Iran.

ISA was amended in July 2010 by the Comprehensive Iran was 8.8 kboe/d, approximately 0.4%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 any 12-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 parties generally prohibit transactions in foreign exchange by the sanctioned 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 Group’s daily average worldwide production. TOTAL does not believesanctioned party, and require blocking of any property of the sanctioned party that its activities in Iran have a material impact onis subject to the Group’s results. Injurisdiction of the future, TOTAL may decide to invest amounts in excess of $20 million per yearUnited States. Investments in the country.petroleum sector commenced prior to the adoption of CISADA appear to remain subject to the pre-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 cannot predict interpretationsdiscontinued prohibited sales under ISA, as amended by CISADA, of or the implementation policy ofrefined 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 possible futurecommitments, TOTAL will not be regarded as a company of concern for its past Iran-related activities.

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 EU 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. ItAmong 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 possibleprohibited. Moreover, with respect to restrictions on transfers of funds and on financial services, any transfer of at least€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 EU and the United States mayin 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. The Group cannot assure that thesecurrent or other activities constitute activity prohibited by ISAfuture regulations or developments will not have a negative impact on its business or reputation.

With respect to Syria, the EU adopted measures in May 2011 with criminal and will subject TOTALfinancial penalties that prohibit the supply of certain equipment to sanctions. TOTAL does not believe that enforcementSyria, as well as certain financial and asset transactions with respect to a list of ISA, including the imposition of the maximum sanctionsnamed individuals and entities. These measures apply to European persons and to entities constituted under the current applicable lawlaws 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 regulations, would have a material negative effect onpetroleum 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, TOTAL’s co-contracting partner in PSA 1988 (Deir Es Zor licence) and the Tabiyeh contract. TOTAL has ceased its results of operations or financial condition.activities that contribute to oil and gas production in Syria.

Furthermore, the United States currently imposes economic sanctions, which are administered by theThe U.S. Treasury Department’s Office of Foreign Assets Control (referred to as “OFAC”) administers and whichenforces 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 onand activities taking place in the United States or that are otherwise subject to U.S. jurisdiction. Sanctions administered by OFAC target, among others, Cuba, Iran, Syria, Myanmar (Burma), Sudan and Cuba.Syria. TOTAL does not believe that these sanctions are applicable to any of its activities in these countries. In 2008, TOTAL’s average daily production in Syria amounted to 15 kboe/dthe OFAC-targeted countries and, that in Myanmar to 14 kboe/d, in each case less than 1%since the independence of its average daily worldwide production.the Republic of South Sudan on July 9, 2011, TOTAL hasis no active businesslonger present in Sudan. TOTAL has no oil or gas production

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 date, has not made any significant investments or industrial investments there. TOTAL has a production sharing contract for a block in southernfrom the Republic of South Sudan where it will consider proceeding with exploration and production activities when suitable legal and security conditions have been established. TOTAL has limited marketing activities in Cuba.related financial transactions.

CertainIn addition, many U.S. states have adopted legislation requiring state pension funds to divest themselves of investmentssecurities in any company with active business operations in Iran or Sudan. On December 31, 2007,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 U.S. Congress adopted the Sudan AccountabilityIranian oil and Divestment Act, whichgas, nuclear, and defense sectors. CISADA supports these state legislative initiatives. If TOTAL’s activitiesoperations in Iran or Sudan were determined to fall within the prohibited scope of these laws, and TOTAL were not to not qualify for any available exemptions, provided by such laws, certain U.S. state pension fundsinstitutions holding interests in TOTAL may be required to sell their interests. If significant, sales of securities resulting from such saleslaws and/or regulatory initiatives could have an adverse effect on the prices of TOTAL’s share price. securities.

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


 

ITEM 4. INFORMATION ON THE COMPANY

History and developmentHISTORY AND DEVELOPMENT

 

 

TOTAL S.A., a Frenchsociété anonyme (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(1).

With operations in more than 130 countries, TOTAL engageshas activities in all aspectsevery sector of the petroleum industry, including Upstream operationsoil industry: in the upstream (oil and gas exploration, development and production, LNG)liquefied natural gas) and Downstream operationsdownstream (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).

TOTAL also produces base chemicals (petrochemicals and fertilizers) and specialty chemicals for the industrial and consumer markets. In addition, TOTAL has interests

equity stakes in coal mines and operates in the coal mining and power generation sectors, as well as a financial interest in Sanofi-Aventis.

and renewable energy sectors. 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 currently owns 99.5% of Elf Aquitaine shares and, since early 2002, 100% of PetroFina shares.

The Company’s principalcorporate 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.


(1)Based on market capitalization (in dollars) as of December 31, 2008.

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 OverviewBUSINESS 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.


 

(M€)  France  Rest of
Europe		  North
America		  Africa  Asia-Pacific and
rest of world		  Total  France   Rest of
Europe		   North
America		   Africa   Rest of
world		   Total 

2008

            

2011

            

Non-Group sales(a)

  43,616  82,761  14,002  12,482  27,115  179,976   42,626     81,453     15,917     15,077     29,620     184,693  

Property, plant and equipment, intangible assets, net

  7,260  13,485  5,182  15,460  10,096  51,483   5,637     15,576     14,518     23,546     17,593     76,870  

Capital expenditures

  1,997  2,962  1,255  4,500  2,926  13,640   1,530     3,802     5,245     5,264     8,700     24,541  

2007

            

2010

            

Non-Group sales(a)

  37,949  73,757  12,404  10,401  24,241  158,752   36,820     72,636     12,432     12,561     24,820     159,269  

Property, plant and equipment, intangible assets, net

  6,437  14,554  4,444  11,872  8,810  46,117   5,666     14,568     9,584     20,166     13,897     63,881  

Capital expenditures

  1,627  2,538  740  3,745  3,072  11,722   1,062     2,629     3,626     4,855     4,101     16,273  

2006

           ��

2009

            

Non-Group sales(a)

  36,890  70,992  13,031  10,086  22,803  153,802   32,437     60,140     9,515     9,808     19,427     131,327  

Property, plant and equipment, intangible assets, net

  5,860  14,066  4,318  10,595  10,442  45,281   6,973     15,218     8,112     17,312     11,489     59,104  

Capital expenditures

  1,919  2,355  881  3,326  3,371  11,852   1,189     2,502     1,739     4,651     3,268     13,349  

 

(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

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 levelslevel of the best in the industry.

TOTAL evaluates exploration opportunities based on a variety of geological, technical, political and economic factors (including taxes and licencelicense terms), and on projected oil and gas prices. Discoveries and extensions of existing fields accounted for approximately 42%76% of the 2,5712,037 Mboe added to the Upstream segment’s proved reserves during the three-year period ended December 31, 2008

2011 (before deducting production and sales of reserves in place and adding any acquisitions of reserves in place during this period). The remaining 58%24% comes from revisions.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.

TOTAL continued to follow an active exploration program in 2008, withIn 2011, the exploration investments of consolidated subsidiaries amountingamounted to 1,243 M€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 million (including exploration bonuses included in the unproved property acquisition costs). The main exploration investments were made in Angola, Nigeria, Norway, Brazil, the United Kingdom, Australia, the United States, Libya, Brunei, Gabon, Cameroon, Indonesia, China, the Republic of CongoNigeria and Canada.Brunei. In 2007,2009, exploration investments of consolidated subsidiaries amounted to 1,233 M€1,486 million (including exploration bonuses included in the unproved property acquisition costs), notably in Nigeria,the United States, Angola, the United Kingdom, Norway, Libya, Nigeria and the Republic of Congo, Australia, Venezuela, China, Indonesia, Canada, Brunei, Algeria, the United States, Mauritania, Yemen, Kazakhstan, Brazil, Azerbaijan and Thailand. In 2006, TOTAL’s exploration investments amounted to 1,214 M€Congo. (including unproved property acquisition costs, excluding the acquisition of an interest in the Ichthys


LNG project in Australia), notably in Nigeria, the United Kingdom, Angola, the United States, Libya, Venezuela, Norway, Algeria, the Republic of Congo, Kazakhstan, Canada, Indonesia, Australia, Argentina, Cameroon, Mauritania, Gabon, China, Azerbaijan and Thailand.

The Group’s consolidated Exploration & Production subsidiaries’ development expendituresinvestments amounted to 7 B€10 billion in 2008,2011, 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. In 2009, development investments amounted to nearly€8 billion, predominantly in Angola, Nigeria, Norway, Kazakhstan, Indonesia, the Republic of the Congo, the United Kingdom, Gabon, Canada, the United States, and Qatar. Development expenditures for 2007 amounted to 7 B€ and were carried out principally in Angola, Norway, Nigeria, Kazakhstan, the Republic of Congo, the United Kingdom, Indonesia, Gabon, Canada, Qatar, VenezuelaThailand, Russia and the United States. In 2006, development expenditures amounted to 6 B€ (including the acquisition of an interest in the Ichthys LNG project in Australia), predominantly in Norway, Angola, Nigeria, Kazakhstan, Indonesia, the Republic of Congo, Yemen, Qatar, the United Kingdom, Canada, Australia, the United States, Venezuela, Azerbaijan and Gabon.Qatar.

Reserves

The definitions used for proved, proved developed and proved undeveloped oil and gas reserves are in accordance with the applicable United States Securities & Exchange Commission (SEC) regulation,(“SEC”) Rule 4-10 of Regulation S-X.(1)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.

This process involves making subjective judgments. Consequently, estimates of reserves are not exact measurements and are subject to revision.

The estimation of proved reserves is controlled by the Group through established validation guidelines. Reserves evaluations are established annually by senior level geoscience and engineering professionals (assisted by a central reserves group with significant technical experience) including reviews with and validation by senior management.

The reserves estimation process requires:

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

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

TOTAL’s oil and gas reserves are assessedconsolidated 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, 2008, 20072011, 2010 and 2006,2009, see “Supplemental oilOil and gas information (unaudited)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.

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

Proved reserves

In accordance with the amended Rule 4-10 of Regulation S-X, requires thatproved reserves for the estimation of reserves be basedyears ended on the economic environment and operating conditions existing at year end. Reserves at year-end 2008 have been determined based on the Brent price onor after December 31, 2008 ($36.55/b).2009, are calculated using a 12-month average price determined as the unweighted arithmetic average of the first-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.

As of December 31, 2008,2011, TOTAL’s combined proved reserves of crude oil and natural gas were 10,45811,423 Mboe (50%(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 remaining 49%. These reserves were 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 remaining 46%. These reserves were located for the most part in Europe (Norway,(mainly in Norway and the United Kingdom, The Netherlands, ItalyKingdom), in Africa (mainly in Angola, Gabon, Libya, Nigeria and France), Africa (Nigeria, Angola, the Republic of Congo, Gabon, Libya, Algeria and Cameroon)the Congo), Asia/Far East (Indonesia, Myanmar, Thailand and Brunei), North America (Canada andin the Americas (mainly in Canada, the United States)States, Argentina and Venezuela), in the Middle East (Qatar,(mainly in Oman, Qatar, the United Arab Emirates Yemen, Oman, Iran and Syria)Yemen), South America (Venezuela, Argentina, Bolivia, Trinidad & Tobago and Colombia)in Asia (mainly in Indonesia and the Commonwealth of Independent States (CIS) (Kazakhstan, Azerbaijan and Russia)Kazakhstan).

As of December 31, 2007, TOTAL’s combined proved reserves of crude oil and natural gas were 10,449 Mboe (52% of which were proved developed reserves). Liquids represented approximately 55% of these reserves and natural gas the remaining 45%. These reserves were located for the most part in Europe (Norway, the United Kingdom, The Netherlands, Italy and France), Africa (Nigeria, Angola, the Republic of Congo, Gabon, Libya, Algeria and Cameroon), Asia/Far East (Indonesia, Myanmar, Thailand and Brunei), North America (Canada and the United States), the Middle East (Qatar, United Arab Emirates, Yemen, Oman, Iran and Syria), South America (Venezuela, Argentina, Bolivia, Trinidad & Tobago and Colombia) and the Commonwealth of Independent States (CIS) (Kazakhstan, Azerbaijan and Russia).


(1)In December 2008, the SEC published a revised set of rules for the estimation of reserves. These revised rules will be used for the 2009 year-end estimation of reserves, and have not been used in the determination of reserves for the year-end 2008.

As of December 31, 2006, TOTAL’s combined proved reserves of crude oil and natural gas were 11,120 Mboe (50% of which were proved developed reserves). Liquids represented approximately 58% of these reserves and natural gas the remaining 42%. These reserves were located for the most part in Europe (Norway, the United Kingdom, The Netherlands, Italy and France), Africa (Nigeria, Angola, the Republic of Congo, Gabon, Libya, Algeria and Cameroon), Asia/Far East (Indonesia, Myanmar, Thailand and Brunei), North America (Canada and the United States), the Middle East (Qatar, United Arab Emirates, Yemen, Oman, Iran and Syria), South America (Venezuela, Argentina, Bolivia, Trinidad & Tobago and Colombia) and the Commonwealth of Independent States (CIS) (Kazakhstan, Azerbaijan and Russia).

Proved reserves represent the estimated quantities of TOTAL’s entitlement under concession contracts, production sharing contracts or buyback agreements. These estimated quantities may vary depending on oil and gas prices.

Sensitivity to oil and gas prices

Changes in the year-end price resultsused as a reference for the proved reserves estimation result in non-proportionate inverse changes in proved reserves associated with production sharing and buyback agreementsrisked service contracts (which together represent approximately 32%26% of TOTAL’s reserves as of December 31, 2008)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 buyback agreementsrisked service contracts due to such higher prices. As a result, higher year-end prices lead to a decrease in TOTAL’s reserves.


The table below sets forthFurthermore, changes in the amount of TOTAL’s worldwideprice used as a reference for the proved reserves (including both developedestimation impact the volume of royalties in Canada and undeveloped) asthus TOTAL’s share of the dates indicated.proved reserves.

TOTAL’s proved reserves(a)(b)  Liquids (Mb) Natural Gas (Bcf) Total (Mboe)

December 31, 2006

  6,471 25,539 11,120

Change from December 31, 2005

  (1.8%) 3.2% 0.1%

December 31, 2007

  5,778 25,730 10,449

Change from December 31, 2006

  (10.7%) 0.7% (6.0%)

December 31, 2008

  5,695 26,218 10,458

Change from December 31, 2007

  (1.4%) 1.9% 0%

(a)Includes TOTAL’s proportionate share of the proved reserves of equity affiliates and of two companies accounted for under the cost method. See “Supplemental oil and gas information (unaudited)”.
(b)Proved reserves as of December 31, 2008, were calculated based on a Brent crude price of $36.55/b, proved reserves as of December 31, 2007, were calculated based on a Brent crude price of $93.72/b and proved reserves as of December 31, 2006, were calculated based on a Brent crude price of $58.93/b, pursuant to Rule 4-10 of Regulation S-X.

Production

For the full year 2008,2011, average daily oil and gas production was 2,3412,346 kboe/d compared to 2,3912,378 kboe/d in 2007.2010.

Liquids accounted for approximately 62%52% and natural gas accounted for approximately 38%48% of TOTAL’s combined liquids and natural gas production in 2008 on an oil equivalent basis.2011.

The table ”Production by geographic area,” below,on the next page sets forth by geographic area TOTAL’s average daily production of crude oilliquids 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 principal producing fields.assets.

As in 20072010 and 2006,2009, substantially all of the crude oilliquids production from TOTAL’s Upstream segment in 20082011 was marketed by the Trading & Shipping division of TOTAL’s Downstream segment. See “Downstreamthe table “— Business Overview — Trading & Shipping”Shipping — Trading 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, is sold on a spot basis, as isand part of its production from the United Kingdom, Norway and Argentina.Argentina, is sold on the spot market. The long-term contracts under which TOTAL sells its natural gas and LNG production 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 and LNG 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 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 period 2012-2014 to be 4,051 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 oilOil and gas information (unaudited)Gas Information (Unaudited)”.


PRODUCTION BY GEOGRAPHIC AREAREGION

 

   2008    2007    2006
Consolidated subsidiaries 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

 635 655  763  658 636  783  603 479  694

Algeria

 32 141  59  32 136  58  35 129  59

Angola

 200 33  205  198 29  203  108 24  112

Cameroon

 13 2  14  13 2  14  13 2  13

Congo, Republic of

 85 23  89  74 17  77  93 22  97

Gabon

 73 20  76  78 29  83  82 27  87

Libya

 74 —    74  87 —    87  84 —    84

Nigeria

 158 436  246  176 423  261  188 275  242

North America

 11 15  14  14 34  20  7 47  16

Canada

 8 —    8  2 —    2  1 —    1

United States

 3 15  6  12 34  18  6 47  15

South America

 32 573  136  118 618  230  119 598  226

Argentina

 14 365  81  14 365  80  11 375  78

Bolivia

 3 105  22  3 131  28  3 97  21

Colombia

 9 45  18  10 46  19  13 43  22

Trinidad & Tobago

 6 2  6  9 2  9  9 2  9

Venezuela

 —   56  9  82 74  94  83 81  96

Asia-Pacific

 29 1,236  246  28 1,287  252  29 1,282  253

Brunei

 2 60  14  2 60  14  3 65  15

Indonesia

 21 857  177  20 882  180  20 891  182

Myanmar

 —   117  14  —   136  17  —   121  15

Thailand

 6 202  41  6 209  41  6 205  41

Commonwealth of Independent States

 12 75  26  10 46  19  7 2  8

Azerbaijan

 4 73  18  3 44  11  < 1 < 1  < 1

Russia

 8 2  8  7 2  8  7 2  8

Europe

 302 1,704  616  335 1,846  674  365 1,970  728

France

 6 103  25  6 115  27  6 124  30

The Netherlands

 1 244  44  1 252  45  1 247  44

Norway

 204 706  334  211 685  338  237 726  372

United Kingdom

 91 651  213  117 794  264  121 873  282

Middle East

 88 281  137  83 91  99  88 11  90

U.A.E.

 10 10  12  11 10  13  14 6  15

Iran

 9 —    9  15 —    15  20 —    20

Qatar

 44 269  91  33 79  47  29 3  29

Syria

 15 2  15  15 2  15  16 2  17

Yemen

 10 —    10  9 —    9  9 —    9

Total consolidated production

 1,109 4,539  1,938  1,246 4,558  2,077  1,218 4,389  2,015

Equity affiliates and non-consolidated subsidiaries

              

Africa(a)

 19 4  20  23 4  23  25 4  25

Middle East(b)

 241 288  295  240 277  291  263 281  316

Rest of world(c)

 87 6  88  —   —    —    —   —    —  

Total equity affiliates and
non-consolidated subsidiaries

 347 298  403  263 281  314  288 285  341

Worldwide production

 1,456 4,837  2,341   1,509 4,839  2,391   1,506 4,674  2,356

(a)Primarily attributable to TOTAL’s share of CEPSA’s production in Algeria.
(b)Primarily attributable to TOTAL’s share of production from concessions in the U.A.E.
(c)Essentially TOTAL’s share of PetroCedeño’s production in Venezuela.

PRESENTATION OF PRODUCTION ACTIVITIES BY GEOGRAPHIC AREA

The table below sets forth, by country, TOTAL’s principal producing fields, the year in which TOTAL’s activities commenced, the principal type of production, the Group’s interest in each field and whether TOTAL is operator of the field.

Main producing fields as of December 31, 2008(a)
Year of
entry into
the country

Main Group-operated

producing fields

(Group share)

Main non-Group-operated

producing fields

(Group share)

Liquids (L)
or Gas (G)
Africa

Algeria

1952Hamra (100.00%)L
Ourhoud (19.41%)(b)L
RKF (48.83%)(b)L
Tin Fouye Tabankort (35.00%)L, G

Angola

1953Blocks 3-85, 3-91 (50.00%)L

Girassol, Jasmim,

Dalia, Rosa (Block 17) (40.00%)

L
Cabinda (Block 0) (10.00%)L
Kuito, BBLT (Block 14) (20.00%)L

Cameroon

1951

Bakingili (25.50%)

L
Bavo-Asoma (25.50%)L
Boa Bakassi (25.50%)L
Ekundu Marine (25.50%)L
Kita Edem (25.50%)L
Kole Marine (25.50%)L
Mokoko - Abana (10.00%)L
Mondoni (25.00%)L

Congo, Republic of

1928

Kombi-Likalala (65%)

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

Gabon

1928Anguille (100.00%)L
Atora (40.00%)L
Avocette (57.50%)L
Baudroie Nord (50.00%)L
Gonelle (100.00%)L
Torpille (100.00%)L
Rabi Kounga (47.50%)L

Libya

1959Al Jurf (37.50%)L
Mabruk (75.00%)L
NC 115 (El Sharara) (3.90%)L
NC 186 (2.88%)L

Nigeria

1962OML 58 (40.00%)L, G
OML 99 Amenam-Kpono (30.40%)L, G
OML 100 (40.00%)L
OML 102 (40.00%)OML102 - Ekanga (40.00%)L
Shell Petroleum Development Company fields (SPDC 10.00%)L, G
Bonga (12.50%)L, G

Year of
entry into
the country

Main Group-operated

producing fields

(Group share)

Main non-Group-operated

producing fields

(Group share)

Liquids (L)
or Gas (G)
North America

Canada

1999Joslyn (74.00%)L
Surmont (50.00%)L

United States

1957Matterhorn (100.00%)L, G
Virgo (64.00%)L, G
South America

Argentina

1978Aguada Pichana (27.27%)L, G
Aries (37.50%)L, G
Canadon Alfa Complex (37.50%)L, G
Carina (37.50%)L, G
Hidra (37.50%)L
San Roque (24.71%)L, G

Bolivia

1995San Alberto (15.00%)L, G
San Antonio (15.00%)L, G

Colombia

1973

Caracara (34.18%)(c)

L
Cupiagua (19.00%)L, G
Cusiana (19.00%)L, G

Trinidad & Tobago

1996Angostura (30.00%)L

Venezuela

1980PetroCedeño (30.323%)L
Yucal Placer (69.50%)G
Asia-Pacific

Brunei

1986

Maharaja Lela

Jamalulalam (37.50%)

L, G

Indonesia

1968Bekapai (50.00%)L, G
Handil (50.00%)L, G
Peciko (50.00%)L, G
Sisi-Nubi (47.90%)L, G
Tambora-Tunu (50.00%)L, G
Badak (1.05%)L, G
Nilam (9.29%)G
Nilam (10.58%)L

Myanmar

1992Yadana (31.24%)G

Thailand

1990Bongkot (33.33%)L, G
Commonwealth of Independent States

Azerbaijan

1996Shah Deniz (10.00%)L, G

Russia

1989Kharyaga (50.00%)L
Europe

France

1939Lacq (100.00%)L, G

Norway

1965Skirne (40.00%)G
Åasgard (7.68%)L, G
Ekofisk (39.90%)L, G
Eldfisk (39.90%)L, G
Embla (39.90%)L, G
Gimle (4.90%)L
Glitne (21.80%)L
Heimdal (26.33%)G
Hod (25.00%)L
Huldra (24.33%)L, G
Kristin (6.00%)L, G

Year of
entry into
the country

Main Group-operated

producing fields

(Group share)

Main non-Group-operated

producing fields

(Group share)

Liquids (L)
or Gas (G)
Europe
Kvitebjørn (5.00%)L, G
Mikkel (7.65%)L, G
Oseberg (10.00%)L, G
Sleipner East (10.00%)L, G
Sleipner West/Alpha North (9.41%)L, G
Snøhvit (18.40%)G
Snorre (6.18%)L
Statfjord East (2.80%)L
Sygna (2.52%)L
Tor (48.20%)L, G
Tordis (5.60%)L
Troll (3.69%)L, G
Tune (10.00%)G
Vale (24.24%)L, G
Valhall (15.72%)L
Vigdis (5.60%)L
Vilje (24.24%)L
Visund (7.70%)L, G
Volve (10.00%)G

The Netherlands

1964F15-A (32.47%)G
F15-B (38.20%)G
K1a (40.10%)G
K4a (50.00%)G
K4b/K5a (36.31%)G
K5b (45.27%)G
K5F (40.39%)G
K6/L7 (56.16%)G
L4a (55.66%)G
Markham unitized fields (14.75%)G

United Kingdom

1962Alwyn North, Dunbar, Ellon, Grant
Nuggets (100.00%)L, G
Elgin-Franklin (EFOG 46.17%)(d)L, G
Forvie Nord (100.00%)L, G
Glenelg (49.47%)L, G
Jura (100.00%)L, G
Otter (81.00%)L
West Franklin (EFOG 46.17%)(d)L, G
Alba (12.65%)L
Armada (12.53%)G
Bruce (43.25%)L, G
Caledonia (12.65%)L
Markham unitized fields (7.35%)G
ETAP (Mungo, Monan) (12.43%)L, G
Everest (0.87%)G
Keith (25.00%)L, G
Maria (28.96%)L, G
Nelson (11.53%)L
SW Seymour (25.00%)L
Middle East

U.A.E.

1939Abu Dhabi –Abu Al Bu Khoosh (75.00%)L
Abu Dhabi offshore (13.33%)(e)L
Abu Dhabi onshore (9.50%)(f)L

Year of
entry into
the country

Main Group-operated

producing fields

(Group share)

Main non-Group-operated

producing fields

(Group share)

Liquids (L)
or Gas (G)
Europe

Iran

1954Dorood (55.00%)(g)L
South Pars 2 & 3 (40.00%)(h)L, G

Oman

1937Various fields onshore (Block 6) (4.00%)(i)L
Mukhaizna field (Block 53) (2.00%)(j)L

Qatar

1936Al Khalij (100.00%)L
Dolphin (24.50%)G
North Field - NFB (20.00%)L, G

Syria

1988Jafra/Qahar (100.00%)(k)L

Yemen

1987Kharir/Atuf (bloc 10) (28.57%)L
Al Nasr (Block 5) (15.00%)L

(a)The Group’s interest in the local entity is approximately 100% in all cases except Total Gabon (57.96%), Total E&P Cameroon (75.80%) and certain entities in the UK, Algeria, Abu Dhabi and Oman (see notes b through k below).
(b)In Algeria, TOTAL has an indirect 19.41% interest in the Ourhoud field and a 48.83% indirect interest in the RKF field via its participation in CEPSA (equity affiliate).
(c)In Colombia, TOTAL has an indirect 34.18% interest in the Caracara field via its participation in CEPSA (equity affiliate).
(d)TOTAL has a 35.8% indirect interest in Elgin Franklin via its participation in EFOG.
(e)Via ADMA (equity affiliate), TOTAL has a 13.33% interest and participates in the operating company, Abu Dhabi Marine Operating Company.
(f)Via ADPC (equity affiliate), TOTAL has a 9.50% interest and participates in the operating company, Abu Dhabi Company for Onshore Oil Operation.
(g)TOTAL has transferred operatorship of Dorood to the National Iranian Oil Company (NIOC). The Group has a 55% interest in the foreign consortium.
(h)TOTAL has transferred operatorship to the National Iranian Oil Company (NIOC) for phases 2 and 3 of the South Pars field. The Group has a 40.00% interest in the foreign consortium.
(i)TOTAL has a direct participation of 4.00% in Petroleum Development Oman LLC, operator of Block 6, in which TOTAL has an indirect participation 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% via OLNG in QalhatLNG (train 3).
(j)TOTAL has a direct participation of 2.00% in Block 53.
(k)Operated by DEZPC which is 50.00% owned by TOTAL and 50.00% owned by SPC.

Africa

TOTAL has been present in Africa since 1928. The African continent is one of the Group’s principal growth regions. Its exploration and production operations are primarily located in countries bordering the Gulf of Guinea, particularly Angola and Nigeria, as well as in North Africa.

The Group’s production in Africa amounted to 783 kboe/d in 2008, compared to 806 kboe/d in 2007 and 720 kboe/d in 2006 (including its share in the production of equity affiliates), amounting to 33% of the Group’s overall production and making TOTAL one of the leading international oil companies in the region, based on production(1).

Since 2006, production has started on the Dalia (2006) and Rosa (2007) fields in Angola, the Moho Bilondo field (2008) in the Republic of Congo and the Akpo field (March 2009) in Nigeria. TOTAL has also launched the OML 58 upgrade project and the development of Usan in Nigeria and the development of Pazflor in Angola. In Madagascar, the Group has acquired an interest on the Bemolanga oil sands permit.

InAngola, the Group’s production amounted to approximately 205 kboe/d in 2008 and 2007, compared to 117 kboe/d in 2006. Production comes essentially

from Blocks 17, 0 and 14. From 2006 to 2008, several discoveries were made, mainly on Blocks 14, 31 and 32.

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 (based on the Cravo, Lirio, Orquidea and Violeta discoveries).

On the Girassol production zone, production from the Girassol, Jasmim and Rosa fields averaged 260 kb/d (in 100%) in 2008. The Rosa field, which began production in June 2007, makes a significant contribution to the supply for Girassol’s FPSO (Floating Production, Storage and Offloading facility).

On the second production zone, the Dalia field, which began production in December 2006, reached its plateau production of 240 kb/d during the second quarter 2007. This development, launched in 2003, is based on a system of sub-sea wells connected to a new FPSO.

On the third production zone, Pazflor, comprising the Perpetua, Zinia, Hortensia and Acacia fields, production is scheduled to begin in 2011. This development, approved late in 2007, calls for the installation of an FPSO with a production capacity of 200 kb/d.


(1)Based on publicly available information.

On the fourth production zone, basic engineering studies were launched in 2008 for the development of the Cravo, Lirio, Orquidea and Violeta fields. This development is expected to lead to the installation of a fourth FPSO with a production capacity of 160 kb/d.

On Block 14 (20%), the development of the Benguela-Belize-Lobito-Tomboco (BBLT) project continued, after the start-up of the platform in January 2006, with ongoing drilling operations. Production from this block is expected to continue to increase with the start-up of Tombua Landana scheduled for 2009.

On ultra-deep offshore Block 32 (30%, operator), the twelve discoveries made between 2003 and 2007 confirmed the oil potential of the block. Pre-development studies for a first production zone in the central/southeastern portion of the block are underway.

From 2006 to 2008, TOTAL also acquired and disposed of acreage. In 2008, leasehold rights for the Calulu zone on Block 33 were extended for five years. TOTAL became the operator of this block, where it has a 55% interest, in 2008. In 2007, TOTAL purchased interests in Blocks 17/06 (30%, operator) and 15/06 (15%) and sold its 27.5% interest in Block 2/85 and its 55.6% share in Fina Petroleos de Angola.

In addition, the Angola LNG project (13.6%) for the construction of a liquefaction plant near Soyo is designed to bring the country’s natural gas reserves to market, in particular the associated gas from the fields on Blocks 0, 14, 15, 17 and 18. This project was approved by the government of Angola and the project’s partners in December 2007. Construction is underway, with production expected to begin in 2012.

InCameroon, TOTAL has been a producer since 1977 and currently operates production of approximately 60 kb/d, or nearly 70% of the country’s overall production.(1) In 2008, the Group’s share of production was 14 kb/d, a level similar to that of 2007 and 2006, due to the start-up of new discoveries which offset the natural decline of mature fields.

The exclusive authorization to operate the Dissoni field (37.5%, operator) was granted by the Cameroonian authorities in November 2008, with production expected to commence in 2012. Plateau production for this field is expected to reach nearly 15 kb/d (in 100%). The Njonji exploration well on this field, drilled in 2008, made a discovery in the deltaic layers. Appraisal of this well is planned for 2009.

InGabon, the Group’s share of production was 76 kboe/d in 2008, compared to 83 kboe/d in 2007 and 87 kboe/d in 2006, due to the natural decline of mature fields. Total Gabon(2) is one of the Group’s oldest subsidiaries in sub-Saharan Africa. In 2007, theConvention d’Etablissementbetween Total Gabon and the government of Gabon was renewed for a 25-year period. This contractual scheme favors exploration activities and development projects.

The first phase of redevelopment of the Anguille field, started in 2007, continued in 2008 with the drilling of thirteen wells over the 2007-2008 period.

On January 1, 2008, Total Gabon sold a 21.25% interest in the deep-offshore Diaba block. Total Gabon now holds a 63.75% interest in this permit, on which a seismic acquisition campaign was conducted early in 2008.

InLibya, the Group’s share of production amounted to 74 kb/d in 2008, down from 87 kb/d in 2007 and 84 kb/d in 2006. This decline is primarily due to the disruption of production on the Al-Jurf offshore field, located on Block C 137, after difficulties encountered in April 2008 during drilling operations.

On the Mabruk field (Block C 17, 75%, operator), plateau production of 19 kb/d was maintained in 2008 through the commissioning of new production facilities in 2007 and the continuation of drilling operations, notably on the deeper Dahra and Garian zones.

•

On Block C 137 (75%(3), operator), operations resumed on the Al Jurf field late in December 2008. The production capacity amounts to 50 kb/d (in 100%).

TOTAL and the Libyan National Oil Corporation (NOC) signed a Memorandum of Understanding in February 2009 to convert the existing contracts for Blocks C 137 and C 17 into exploration and production sharing agreements (EPSA IV) and extend them until 2032.

•

On Block NC 186 (24%(3)), structure I came onstream in June 2008, while structures B and H began production late in 2006. Pursuant to the renewal of the contract for this block in July 2008 and the extension of the permit until 2032, the consortium made a new commitment to drill eight exploration wells during the period from August 2008 to August 2013.


(1)Source: TEP Cameroun et Société Nationale des hydrocarbures du Cameroun.
(2)Total Gabon is a Gabonese company whose shares are listed on Euronext Paris. TOTAL holds 58%, the Republic of Gabon 25% and the public float is 17%.
(3)Participation in the foreign consortium.

•

On Block NC 115 (30%(1)), development work is continuing, with the drilling of several producing wells. A new 5-year exploration phase started in 2008, with a commitment to drill eight wells. The permit was also extended until 2032.

In the Murzuk Basin, pursuant to the extension of the exploration period for a portion of Block NC 191 (100%, operator), an appraisal well was drilled late in 2008 on the discovery made in 2006. The development plan for this discovery is under study.

In the Cyrenaic Basin, a seismic campaign was completed on Block 42 (60%, operator), which was awarded pursuant to the second bidding process launched by Libya in 2005. Drilling of an exploration well is scheduled for 2009.

InNigeria, the Group’s share of production reached 246 kboe/d in 2008, compared to 261 kboe/d in 2007, and 242 kboe/d in 2006. TOTAL has been present in Nigeria in Exploration & Production since 1962. It operates seven production permits (OML) out of the forty-seven in which it holds an interest, and two exploration permits (OPL) out of the eight in which it holds an interest.

TOTAL holds a 15% interest in the Nigeria LNG Ltd gas liquefaction facility located on Bonny Island. The sixth liquefaction train came onstream late in 2007, increasing the plant’s overall capacity to 22 Mt/y of LNG. Studies for a project to construct a seventh train with a capacity of 8.5 Mt/y continued in 2008.

In 2008, the Group continued to develop its gas supply scheme for the Brass LNG project (17%), which calls for the construction of two 5 Mt/y trains. Front end engineering and design studies (FEED) for this plant are currently being completed. The shareholders of this project began site preparation work in 2008.

TOTAL confirmed its ability to supply gas to the LNG plants in which it has interests to meet the growing domestic demand in gas:

On the OML 136 permit (40%), the Group conducted an appraisal of the Amatu field in 2008 and is planning to appraise the Temi Agge field in 2009.

On the OML 112/117 permits (40%), TOTAL continued development studies for the Ima gas field in 2008.

As part of its joint venture with the Nigerian National Petroleum Corporation (NNPC), TOTAL launched a project to increase the production capacity of the OML 58 permit (40%, operator) to 550 Mcf/d of gas by 2011. A second phase of this project, currently being assessed, would allow the development of other reserves through these facilities. The Group also continued the appraisal of the Amenam East gas and condensates field, located on the OML 99 permit. Studies underway on this field suggest that it may be possible to develop it as a satellite of the currently producing Amenam field.

On the OML 102 permit (40%, operator), TOTAL continued to develop the Ofon II project in 2008, as part of its joint venture with NNPC. The Group also discovered the Etisong oil field, located 15 km from the Ofon field, which is currently in production.

On the OML 130 permit (24%, operator), TOTAL is actively valuing its deep-offshore discoveries. Regarding the development of the Akpo field, the FPSO arrived on site in October 2008, as planned, and production started in March 2009 ahead of the planned start-up date. Plateau production is expected to reach 225 kboe/d (in 100%). The Group also completed pre-project studies to develop a second production facility on the Egina field, for which the Nigerian authorities have approved a development plan.

On the OML 138 permit (20%, operator), TOTAL also launched the Usan project in February 2008. The main engineering and construction contracts are being implemented with the objective of producing 180 kb/d (in 100%) early in 2012.

As part of its strategy of deep-offshore development, the Group acquired interests in three exploration permits in 2008: the OPL 279 (14.5%) and OPL 285 (25.7%) permits, adjacent to the Ehra and Bonga fields, respectively, and the OPL 257 permit (40%), south of the OML 130 permit (Akpo, Egina). An exploration well is expected to be drilled in 2009 on the OPL 285 permit.

Security concerns in the Niger Delta region led the Shell Petroleum Development Company (SPDC, of which TOTAL owns 10%) to progressively stop production at certain facilities, which were targeted in attacks, starting in the first quarter 2006. Repair work on facilities in the western zone of the Niger Delta region continued in 2008, allowing production to partially resume. The SPDC joint venture’s gas and condensates production was affected by the shutdown of the Soku treatment plant,


(1)Participation in the foreign consortium.

which had to be repaired after vandalism on the export pipelines late in 2008. NLNG’s export capacity also decreased as a result of this shutdown. The offshore Bonga field on the OML 118 permit, operated by SNEPCO in which the Group holds a 12.5% interest, was attacked in June 2008, which did not have a significant impact on the Group’s production in the country.

In theRepublic of Congo, the Group’s share of production was 89 kboe/d in 2008, compared to 77 kboe/d in 2007 and 97 kboe/d in 2006.

Production began on the Moho-Bilondo field (53.5%, operator) in April 2008, where the drilling of development wells is continuing. Plateau production (in 100%), currently approximately 50 kboe/d, is expected to reach 90 kboe/d. The Moho North Marine 3 appraisal well, drilled late in 2008 after two discoveries made in 2007 (Moho North Marine 1 and 2), confirmed the pole of resources in the tertiary layer in the northern portion of this permit.

In 2008, production resumed on the Nkossa field (53.5%, operator) after the accident that occurred on a cargo hose in 2007. In 2008, production averaged approximately 46 kb/d (in 100%).

In October 2008, TOTAL approved the launch of the Libondo (65%, operator) development. Located on the Kombi-Likalala-Libondo operating field, 50 km off the coast at a depth of 114 meters below sea level, this field will be developed through an additional fixed platform. The production will be offloaded on the existing Yanga platform. Commissioning is scheduled for the second half 2010, with an expected plateau production of 8 kb/d (in 100%) to be reached in 2011.

This project will be carried out locally in Pointe-Noire, as part of the Group’s sustainable development policy, through the redevelopment of a construction site which has been unused for several years.

InAlgeria, the Group is presentwith production of 79 kboe/d in 2008 stable compared to 2007 and 2006. The Group’s production comes from its direct interests in the TFT (Tin Fouyé Tabenkort) and Hamra gas fields and from its 48.83% interest in CEPSA, a partner of Sonatrach (the Algerian national oil and gas company) on the Ourhoud and Rhourde El Krouf fields.

On TFT, a compression project is expected to be completed in 2009, which would permit plateau production to remain stable.

Early in 2009, TOTAL, in partnership with Sonatrach and CEPSA, requested an operating permit for the Timimoun gas field located in the southwest of the country.

InMadagascar, TOTAL acquired a 60% interest in, and the operatorship of, the Bemolanga oil sands permit in September 2008. Bemolanga contains oil sands accumulations which are expected to be developed through mining techniques. A first two-year appraisal phase is expected to confirm the bitumen resources which are necessary for development through mining techniques.

The Group is conducting exploration activities inMauritania on the Ta7 and Ta8 permits (operator), located in the Taoudenni Basin. TOTAL now owns 60% of these permits following the sale of a 20% interest to Sonatrach, the Algerian national company, and a 20% interest to Qatar Petroleum International, the Qatari national company. Drilling of an exploration well on the Ta8 permit is scheduled for 2009.

InSudan, the Group had its rights to an exploration permit upheld in the southern part of the country, although no activity is currently underway in this country. For more information on TOTAL’s presence in Sudan, see “Item 4. Other Matters — Regulations concerning Iran and Sudan”.

North America

The Group has been present in North America since 1957, with production of 14 kboe/d in 2008, compared to 20 kboe/d in 2007 and 16 kboe/d in 2006.

Changes in production were partly due to shutdowns related to hurricane damage in the Gulf of Mexico.

In this region, the strategy of the Group is to strengthen its positions in Canadian oil sands, notably through the acquisition of Synenco in 2008 and the takeover bid for UTS Energy Corporation launched at the end of January 2009, and in deep-offshore permits in the Gulf of Mexico.

InCanada, the Group is involved in oil sands projects in Athabasca, Alberta, through its interests in the Surmont (50%), Joslyn (74%, operator, after selling a 10% interest to INPEX in 2007) and Northern Lights (50%) permits. Since the end of 2004, the Group has also acquired 100% of several permits (oil sands leases) through several auction sales, notably the Griffon permit, where the third 2008/2009 winter appraisal campaign is being completed. In 2008, the Group’s production was 8 kboe/d.

On the Surmont permit, after the positive results from the 1999 start-up of a pilot project to extract bitumen using Steam Assisted Gravity Drainage (SAGD), the decision to launch a first phase of industrial development (Surmont Phase 1A) was made late in 2003. Construction of this first phase was completed in June 2007, with the gradual


start-up of steam injection for the first eighteen pairs of wells. The first pair of wells switched to SAGD mode in October 2007, and commercial production started in November 2007. Ramp-up of production on Surmont continued throughout 2008 to reach approximately 18 kboe/d (in 100%) late in 2008. In parallel, the operator of the field launched construction work for phases 1B and 1C, which are designed to add the sixteen pairs of wells needed to reach plateau production. Since 2005, the Group has acquired several permits north and west of Surmont.

The Joslyn permit, located approximately 140 km north of Surmont, is expected to be developed through mining techniques in two development phases of 100 kb/d of bitumen each. The decision to launch the Joslyn North Mine phase is expected to be made at the beginning of the next decade, with the decision to launch the Joslyn Mine Expansion phase to be made thereafter. However, this schedule is subject to the Alberta Energy Resources Conservation Board (ERCB) administrative approval process. A small SAGD production unit began production in 2006, but, because it did not reach the expected 10 kb/d plateau production due to constraints on the pressure of the steam being injected, this unit is currently suspended. Both the mothballing of this site’s facilities and the possible complete removal of assets from this site are being studied. The corresponding reserves were debooked as of December 31, 2008.

In 2006, TOTAL conducted studies leading to the decision to locate a delayed coker technology upgrader with a capacity of approximately 230 kb/d in Edmonton (Alberta). This upgrader is expected to be built in two phases to correspond to the anticipated increase in mining production on the Joslyn permit. The public announcement was made in May 2007 and the ERCB filing was made in December 2007. The final decision to launch this project will be made after basic engineering studies launched in May 2008 are completed, and remains subject to administrative approval.

In August 2008, the Group closed the acquisition of Synenco, whose two principal assets are a 60% interest in the Northern Lights project and 100% of the adjacent McClelland permit. In the first quarter 2009, the Group sold a 10% share in the Northern Lights project and a 50% share in the McClelland permit to Sinopec, 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 January 2009, TOTAL’s subsidiary Total E&P Canada Ltd launched a public offer to acquire all the issued and outstanding shares of UTS Energy Corporation (UTS), a company listed on the Toronto Stock Exchange. UTS’s main asset is a 20% interest in the Fort Hills project.

In theUnited States, highlights since 2005 included the acquisition of acreage offshore in the Gulf of Mexico and in Alaska. In 2008, the Group’s production amounted to 6 kboe/d, compared to 18 kboe/d in 2007 and 15 kboe/d in 2006.

In 2005, TOTAL acquired a 17% share in the deep-offshore Tahiti field located in the Gulf of Mexico. The Tahiti field is currently being developed and start-up of production is scheduled for June 2009.

In September 2007, the Group committed to develop the first phase of the offshore Chinook project, with a production test scheduled for 2010. TOTAL increased its share in this project from 15% to 33.33% in August 2006.

In the Gulf of Mexico, in 2008 TOTAL acquired eighteen deep-offshore exploration blocks. In 2007 and 2006, the Group acquired forty-seven deep-offshore exploration blocks.

In Alaska, TOTAL acquired a 30% interest in several onshore exploration blocks, referred to as White Hills, in March 2008. These blocks are located 40 km southwest of the Prudhoe Bay field. In 2007, the Group acquired thirty-two offshore exploration blocks in the Beaufort Sea.

Over the 2006-2007 period, the Group sold its interests in several assets, including two mature fields, Bethany and Maben, located, respectively, in Texas and in Mississippi, the Camden Hills and Aconcagua fields, and the Canyon Express pipeline in the Gulf of Mexico.

InMexico, TOTAL is conducting various studies in cooperation with the state-owned PEMEX under a technical cooperation agreement signed in 2003 and renewed in 2008.

    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

716481887656917980564182

The Group’s production in South America reached 224 kboe/d in 2008, compared to 230 kboe/d in 2007 and 226 kboe/d in 2006, nearly 10% of its worldwide production in 2008.Argentina

143978614381831536480

In Venezuela, the transformation of Sincor into a mixed company, PetroCedeño, in which TOTAL now holds a 30.323% interest, was finalized in February 2008.Bolivia

3118253942039120

In Bolivia, six new exploration and production contracts, renegotiated pursuant to the May 1, 2006, decree regarding the nationalization of hydrocarbons, became effective on May 2, 2007.The Group’s interest in Block XX West (operator) was increased to 75% in 2006.Colombia


TOTAL has been present inArgentinasince 1978 and operates approximately 25% of the country’s gas production.(1) Production averaged 81 kboe/d in 2008, compared to 80 kboe/d in 2007 and 78 kboe/d in 2006.

In the Neuquen Basin, the connection of satellite discoveries and an increase in the low-pressure compressing capacity allowed the extension of the San Roque (24.7%, operator) and Aguada Pichana (27.3%, operator) fields’ production plateaus and the use of the full capacity of the gas treatment plants at each site.

On the San Roque field, the low-pressure compression project, started in January 2006, was brought on-line in March 2008, following up on medium-pressure compression units brought on-line in August 2006. Production on the Rincon Chico Nord discovery started in October 2008.

The low-pressure compression project on the Aguada Pichana field was brought on-line in August 2007. Development of the Aguada Pichana North discovery is underway. Start-up of the second development phase, launched in September 2007, is scheduled for the second half 2009. The first phase began production in December 2007. In addition, drilling of additional wells continued. Sixteen new wells, approved in April 2008, are expected to come onstream in the first half 2009, followed by eighteen contingent wells.

In February 2009, TOTAL and the Argentinean authorities signed an agreement extending the Aguada Pichana and San Roque concessions for ten years (from 2017 until 2027).

52711113418134523

•

In Tierra del Fuego, where the Group operates notably the offshore Carina and Aries fields (37.5%), a fourth medium-pressure compressor was installed in July 2007 to debottleneck the facilities and increase the Tierra del Fuego gas production capacity from 12 Mm3/d to 15 Mm3/d (approximately 424 Mcf/d to 530 Mcf/d).

The Tierra del Fuego gas export pipeline does not currently have the capacity to transport all of the gas that could be produced with this development. Work to increase the capacity of the pipeline is on-going since 2008. Carina and Aries came onstream in June 2005 and January 2006, respectively.

InBolivia, the Group’s share of production, primarily gas, amounted to 22 kboe/d in 2008, compared to 28 kboe/d in 2007 and 21 kboe/d in 2006. TOTAL holds interests in six permits: two producing permits, San Alberto and San Antonio (15%); and four permits in the

exploration or appraisal phase, Blocks XX West (75%, of which 34% was acquired in 2006, operator), Aquio and Ipati (80%, operator) and Rio Hondo (50%).

The Group was required to renegotiate the contracts for the fields in which it had interests pursuant to the May 1, 2006, decree regarding the nationalization of hydrocarbons. Six new exploration and production contracts signed in late October 2006 became effective on May 2, 2007, after approval and notarization by the Bolivian legislature.

In September 2008, TOTAL entered into a cooperation agreement with Gazprom and Yacimentos Petrolíferos Fiscales Bolivianos to explore the Azero Block within the framework of a mixed public/private company. This block is adjacent to the Ipati and Aquio blocks where the Group made a significant gas discovery in 2004. Seismic work to appraise this discovery was conducted in 2008. The interpretation of seismic data is underway.

Development studies for the Itau field, discovered on Block XX West, are also underway.

TOTAL has been present inVenezuela since 1980 and is one of the main partners of the state-owned PDVSA (Petróleos de Venezuela S.A.). In 2008, the Group’s share of production amounted to 92 kboe/d, compared to 94 kboe/d in 2007 and 96 kboe/d in 2006.

On March 31, 2006, the Venezuelan authorities terminated all operating contracts signed in the 1990s and decided to transfer the management of the fields concerned to new mixed companies to be created with the national company PDVSA as the majority owner.

In May 2006, the Venezuelan organic law on hydrocarbons was amended with immediate effect to establish a new extraction tax, calculated on the same basis as for royalties and bringing the overall tax rate to 33.33%. In September 2006, the corporate income tax was modified to increase the rate on oil activities (excluding natural gas) to 50%. This new tax rate came into effect in 2007.

On June 26, 2007, TOTAL signed heads of agreement with PDVSA, with the approval of the Ministry for Energy and Oil, providing for the transformation of the Sincor association into a mixed company, PetroCedeño, and the transfer of operations to this mixed company. Under this agreement, TOTAL’s interest in the project decreased from 47% to 30.323% and PDVSA’s interest increased to 60%. Conditions for this transformation were approved by the Venezuelan National Assembly in October 2007 and the transformation was finalized in February 2008.


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

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. As of December 31, 2008, substantially all of this compensation had been paid.

Early in 2008, TOTAL signed two agreements for joint studies with PDVSA on the Junin 10 block, in the Orinoco region.

On April 15, 2008, the Venezuelan Parliament approved a law providing for a special tax on extraordinary profits. This new tax is calculated based on net liquid hydrocarbon volumes exported and is payable when the average reference price for the month exceeds $70/b.

TOTAL’s holding of a 49% interest in the offshore exploration Block 4, located in the Plataforma Deltana, was formally approved by the authorities in January 2006. The exploration campaign, which involved three wells, was completed on October 23, 2007. In October 2008, the Ministry for Energy and Oil agreed to let the joint venture retain the Cocuina discovery zone (lots B and F) and relinquish the rest of the block.

InBrazil, TOTAL holds interests in Block BC-2 (41.2%) and Block BM-C-14 (50%) located in the Campos Basin.

The partners on Block BC-2 drilled an appraisal well early in 2007 and filed a Declaration of Commercial Discovery with the National Oil Agency in late August 2007. Xerelete (formerly Curió), offshore at a depth of 2,400 m, was discovered in 2001. The southern extremity of Xelerete is located on the adjacent BM-C-14 Block.

The partners on both blocks are planning to unitize the field in 2009 and file a development plan with the Brazilian National Oil Agency. A 27-year concession agreement is expected to be granted starting on the date of filing of the unitization agreement.

TOTAL has been present inColombia since 1973 through its 19% interest in the onshore Cupiaga and Cusiana fields located at the base of the Andes, and via its participation in CEPSA (48.83%), which has operated the Caracara oil field since 2008. The Group’s share of production was 23 kboe/d in 2008 compared to 19 kboe/d in 2007 and 22 kboe/d in 2006.

Two development projects are currently going through the approval process. They are designed to increase the gas production capacity from 180 Mcf/d to 250 Mcf/d

and to begin recovering 6 kb/d of LPG. Construction of the facilities is expected to begin in 2009 and first production for additional gas and LPG is expected in 2010 and 2011, respectively.

TOTAL also holds a 50% interest in the Niscota exploration permit where the drilling of an exploration well is currently underway.

TOTAL has been present inTrinidad & Tobago since 1996 through its 30% interest in the offshore Angostura field located on Block 2C. The Group’s production was 6 kb/d in 2008 compared to 9 kb/d in 2006 and 2007. A second phase, for the development of gas reserves, is underway, with production expected to begin in 2011.

44712323525

Venezuela

455954455855446254

Asia-Pacific

271,160231281,237248331,228251

Australia

—254—61———

Brunei

256132591424912

Indonesia

187571581985517825898190

Myanmar

—11915—11414—10313

Thailand

720341720341617836

In 2008, TOTAL’sCIS

22525119135623145224

Azerbaijan

457143541335012

Russia

184681051021011212

Europe

2451,4535122691,6905802951,734613

France

5691858521510024

The Netherlands

121438123442125445

Norway

172619287183683310199691327

United Kingdom

675511698068820790689217

Middle East

3171,3705703081,185527307724438

United Arab Emirates

226722402077622220172214

Iran

———2—28—8

Oman

246236235534225634

Qatar

446161554963916450515141

Syria

11218531413039143420

Yemen

12402861328566124721

Total production

1,2266,0982,3461,3405,6482,3781,3814,9232,281

Including share of equity affiliates

3161,383571300781444286395359

Algeria

103101942020321

Colombia

4—47—76—6

Venezuela

447454564644645

United Arab Emirates

219622311996621219162202

Oman

226234225532225634

Qatar

838278836775322142

Russia

946595——————

Yemen

—40274—28352—479

(a)The Group’s production in the Asia-Pacific region, mainly from Indonesia, was 246 kboe/d, compared to 252 kboe/d in 2007 and 253 kboe/d in 2006, representing approximately 11%Canada consists of bitumen only. All of the Group’s overallbitumen production for is in Canada.

PRESENTATION OF PRODUCTION ACTIVITIES BY REGION

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

TOTAL’s producing assets as of December 31, 2011(a)
Year of
entry into
the year.country

Operated

Highlights(Group share in %)

Non-operated

(Group share in %)

Africa

Algeria

1952
Tin Fouye Tabankort (35.00%)

Angola

1953

Girassol, Jasmim,

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

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%)

Loango (50.00%)

Zatchi (35.00%)

Gabon

1928

Anguille (100.00%)

Anguille Nord-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%)

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%)

Year of
entry into
the 2006-2008 period includedcountry

Operated

(Group share in %)

Non-operated

(Group share in %)

North America

Canada

1999
Surmont (50.00%)

United States

1957

Several assets in the acquisitionBarnett Shale

area (25.00%)(c)

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

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 Antonio (15.00%)

Itau (41.00%)

Colombia

1973
Cusiana (11.60%)

Trinidad & Tobago

1996
Angostura (30.00%)

Venezuela

1980
PetroCedeño (30.323%) Yucal Placer (69.50%)

Asia-Pacific

Australia

2005
GLNG (27.50%)

Brunei

1986Maharaja 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%)

Badak (1.05%)

Nilam-gas and condensates (9.29%)

Nilam-oil (10.58%)

Myanmar

1992Yadana (31.24%)

Thailand

1990
Bongkot (33.33%)

Commonwealth of interestsIndependent States

Azerbaijan

1996
Shah Deniz (10.00%)

Russia

1991Kharyaga (40.00%)
Several fields through the participation in several exploration permitsNovatek (14.09%)

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%)

Dommartin-Lettrée (56.99%)

Year of
entry into
the country

Operated

(Group share in Vietnam, Australia, Indonesia, Malaysia and Bangladesh and %)

Non-operated

(Group share in %)

Norway

1965Skirne (40.00%)

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%)

E16a (16.92%)

E17a/E17b (14.10%)

J3b/J6 (25.00%)

Q16a (6.49%)

Year of
entry into
the acquisition of a 24%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)

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%)

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%)

(a)The Group’s interest in the Ichthyslocal entity is approximately 100% in all cases except for Total Gabon (58.28%) and certain entities in the United Kingdom, Abu 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 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 5.54% interest in the Oman LNG projectfacility (trains 1 and 2), and an indirect participation of 2.04% through OLNG in Australia.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.

•

In addition, TOTAL startedOn the appraisalTFT field, plateau production was maintained at 185 kboe/d. A 3D seismic survey covering 1,380 km2on the East and development studiesWest portions of the South Sulige blockfield was completed in China. During this period, new discoveries were also madeOctober 2011. The data is currently being processed and interpreted.

•

Launched in Brunei, Australia, Thailand and in Indonesia on2010 following approval of the Mahakam permit.

InAustralia, where TOTAL has been present since the beginning of 2005, the Group has progressively increased its acreage with the acquisition of interests in thirteen offshore permits, four of which are operateddevelopment plan by the Group, offALNAFT national agency, the northwest coast of Australia inbasic engineering phase for the Carnavon, Browse, Vulcan and Bonaparte Basins.

In the Browse Basin, preparation of the Ichthys gas and condensates field development, located on the WA-285P permit (24%), continued. This LNGTimimoun project has been designedcompleted. Commercial gas production is scheduled to produce 8.4 Mt/start up in 2016, with anticipated plateau production of 1.6 Bm3/y (160 Mcf/d).

•

Under the Ahnet project, the technical section of LNG, 1.6 Mt/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 of LPG and 75 kb/d of condensates. The gas will be processed offshore to recover, stabilize, stock and export the condensates, and then routed by an 875 km pipeline to Darwin where the liquefaction plant will be built. Front end engineering and design studies (FEED) were launched in January 2009 for the liquefaction plant and are expected to be launched soon for the offshore portion for a start-up of production at the field by the middle of the next decade.(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 WA-344P (40%) permit, located neardeep-offshore Diaba license (Total Gabon 63.75%, operator), following the Ichthys field, the Mimia-1 well drilled2D seismic survey that was performed in 2008 led toand 2009, a gas discovery.

In 2008, TOTAL strengthened its position near Ichthys with the acquisition of the WA-408P permit (100%, operator). In the Vulcan Basin, TOTAL acquired a 50% interest6,000 km2 3D seismic was shot in the AC/P42 and 43 permits. The WA-297P and WA-301/303/304/305P permits were relinquished.

In 2008, significant2010. This new seismic acquisition activities were conducted on the four permits operated by the Group. Data interpretation and site preparation are expected in 2009, to be followed by a drilling campaign.

InBrunei, where TOTALsurvey has been present since 1986,processed and the Group operatesresults 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 offshore Maharaja Lela Jamalulalam field located on Block B (37.5%). Gas and liquids production in Group share was 14 kboe/d in 2008, compared to 14 kboe/d in 2007 and 15 kboe/d in 2006. The gas produced at this field is delivered to the Brunei LNG liquefaction plant.

In 2008, two exploration wells, ML-4 and MLJ2-06, drilled on Block B, south of the zone currently in production, discovered significant new gas and condensates accumulations. The MLJ2-06 well, drilled in high pressure/high temperature formations, has a final depth of 5,850 m. Production began in November 2008. The exploration drilling campaignevents is expected to resume in 2009.

Exploration activities on deep-offshore Block J (60%, operator) have been suspended since May 2003 due to a border dispute with Malaysia.

InChina, the Group is active on the South Sulige block, located in the Ordos Basin, in the Inner Mongolia province. In 2008, two additional wells were drilled and successfully tested. Appraisal work, which began in September 2006, continued in 2007 with seismic acquisition, the drilling of two new wells and tests on existing wells. Development studies for this field, carried out in 2008, will continue in 2009 in order to define a joint development plan with the China National Petroleum Corporation (CNPC) by the end of 2009.2012.

•

InIndonesia, where TOTAL has been present since 1968, production amounted to 177 kboe/d in 2008, compared to 180 kboe/d in 2007 and 182 kboe/d in 2006.

TOTAL’s operations in Indonesia are primarily concentrated the onshore Murzuk Basin, following a successful appraisal well drilled on the Mahakam permit (50%discovery made on a portion of Block NC 191 (100%(2), operator), which covers several fields, including Pecikoa 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 Tunu, the largest gas fieldspublic float is 16.72%.
(2)TOTAL’s stake in the East Kalimantan zone.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:

–

TOTAL delivers mostOn 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 natural gasjoint venture with the Nigerian National Petroleum Company (NNPC), TOTAL is continuing with the project to increase the production to the Bontang LNG plant operated by the Indonesian company PT Badak. The overall capacity of the eight liquefaction trainsOML 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 Bontang plantassets to 50%. The Northern Lights project is 22 Mt/y.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 was 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, operated by TOTAL amounted to 2,570 Mcf/d. Thetransport and liquefaction project is based on the development of coal gas delivered by TOTAL to Bontang LNG accounted for 80% of its supply. In addition to gas production, operated condensates and oil production from the HandilFairview, Roma, Scotia and Bekapai fields amountedArcadia fields. The final investment decision was made in January 2011 and start-up is expected in 2015. LNG production is expected to 51 kb/deventually reach 7.2 Mt/y. The preliminary project development and 24 kb/d, respectively.

Onengineering work are continuing. The 420 km pipeline for transporting the Tunugas 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:

–

In 2011, the scheduled drilling of additional wells continued in 2008 as partthe main reservoir of the twelfth and thirteenthTunu field continued with increasing density. The second phase of drilling development phases. A new seismic campaign is scheduled for 2009wells to improve imaging on thediscover shallow gas reservoirs and to identify the optimal location for additional wells. Gas production on Tunu was 1,304 Mcf/d in 2008. The eleventh development phase, launched in 2005 to install onshore low-pressure compression units, is continuing with completion scheduled in 2009.has started.

–

The development ofOn the Peciko field, continued in 2008, with thePhase 7 drilling, of additional wells and the installation of a new platform as part of the fifth development phase. New compression capacities (phase 6) are currently being developed and are expected to be commissioned in 2009. Drilling of additional wells is expected to continuewhich started in 2009, (phase 7). Gas production on Peciko was 869 Mcf/d in 2008.

On the Sisi-Nubi field (47.9%, operator), which began production in November 2007, drilling continued in 2008 and gas exports reached 350 Mcf/d late in 2008. The gas from Sisi-Nubi is produced through Tunu’s processing facilities.continuing.

–

On the Mahakam permit, the oil discovery made in 2008 on the East Bekapai exploration well led to the launch of a development study, currently underway. On this permit, theThe development of South Mahakam, withwhich includes the Stupa, West Stupa and East Mandu discoveries was launched early in 2008, with production scheduled to begin late in 2011.

In 2008, a seismic campaign was conducted on the South East Mahakam exploration block (50%, operator), located in the Mahakam Delta. TOTAL was awarded this block early in 2007.

After disappointing exploration results, TOTAL relinquished the East Sepanjang (27%) offshore permit located northeast of the Island of Java in September 2008.


InThailand, TOTAL’s main assetfields, is the Bongkot gas and condensates field (33.3%), where the Group’s 2008 production amounted to 41 kboe/d, similar to 2006 and 2007. PTT (the state-owned Thai company) purchases the entire gas and condensates production. Late in 2007, the Thai authorities agreed to extend the end of the concession period of the field by ten years, from 2013 to 2023.

On Bongkot, two successful exploration wells were drilled in 2008 on the Ton Sak and Ton Son structures. Ton Sak is being developed as part of phase 3H and Ton Son is expected to be developed as part of future phase J.

Production from the 3F development phase started in July 2008. This phase included the installation of three production platforms. Start-up of production at the new 3G development phase (two platforms) is expected in the second quarter 2009. This phase was launched in April 2007 after gas discoveries were made early in 2007 on Blocks 15 and 16.

Gas discoveries made in the first half 2008 led to a new development phase. This 3H phase (three platforms) was launched in July 2008.ongoing. Start-up of production is expected in 2010.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:

–

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

–

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

–

the southern portionsecond low-pressure compressor installation phase to increase gas production was completed in the first quarter of the field (Great Bongkot South) was completed. This development, planned in several phases, is designed to include a processing platform, a residential platform and thirteen production platforms. Start-up of the facilities is expected in 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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InMyanmar, TOTAL operates the Yadana field (31.2%). Located offshore Blocks M5 and M6, this field produces gas which is primarily delivered to PTT to be used in Thai power plants. In 2008, production amounted to 14 kboe/d in Group share, compared to 17 kboe/d in 2007 and 15 kboe/d in 2006.

InMalaysia, TOTAL signed a production sharing contract in May 2008 with state-owned Petronas for the offshore exploration Blocks PM303 and PM324 (70%, operator). An operating structure was created in 2008 in Kuala Lumpur. 3D seismic work is expected to be carried out in 2009, followed by drilling in high pressure/high temperature conditions. TOTAL is also involved in exploration activities on the SKF offshore block (42.5%).

InVietnam, a 3D seismic acquisition covering 1,600 km2 was conducted from May to July 2008 on the offshore exploration Block 15-1/05. In 2007, TOTAL and PetroVietnam entered intoGazprom signed an agreement under which the Group holds a 35% interest in the production sharing agreement for this block.

In March 2009, TOTAL and PetroVietnam signed a production sharing contract for Blocks DBSCL-02 and DBSCL-03. Located in the Mekong Delta region, these onshore blocks are held by TOTAL (75%, operator) and PetroVietnam (25%).

InBangladesh, TOTAL operates two exploration blocks located offshore the southeastern coast, Blocks 17 and 18, acquired in 2007. In 2008, a 3D seismic campaign was conducted on these blocks. Pursuant to the interpretation results, the decision to relinquish the blocks was made late in February 2009.

Commonwealth of Independent States (CIS)

In 2008, TOTAL’s production in this area reached 26 kboe/d, representing approximately 1% of the Group’s overall production, compared to 19 kboe/d in 2007 and 8 kboe/d in 2006.

Highlights of 2008 included the signature of a number of agreements for the Kashagan field by members of the North Caspian Sea Production Sharing Agreement (NCSPSA) consortium and the Kazakh authorities.

In Russia, TOTAL and Gazprom signed a cooperation agreement in 2007 for the first phase of development on the giant Shtokman field. In Azerbaijan,gas and condensates field, located in the Shah Deniz project began production late in 2006.

InAzerbaijan, where TOTAL has been present since 1996, production averaged 18 kboe/dBarents Sea. Under this agreement, Shtokman Development AG (TOTAL, 25%) was created in 2008 compared to 11 kboe/d in 2007. TOTAL’s activitiesdesign, 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 focusedunderway 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 Shah Deniz field (10%), where production beganTeriberka 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 December 2006. The South Caucasus Pipeline Company (SCPC), in which TOTAL holds a 10% interest, is the ownerTeriberka, representing approximately half of the gas pipeline which transports gas from Shah Deniz to the Turkish and Georgian markets.

Gas deliveries from the Shah Deniz field to Turkey, Georgia and Azerbaijan continued in 2008. A new appraisal well is being drilled on this field to further evaluate available reserves before the launch of a second development phase.

In 2008, the BTC (Baku-Tbilissi-Ceyhan) pipeline was used to drain off the condensates produced at Shah Deniz. This pipeline, owned by BTC Co., in which TOTAL holds a 5% interest, links Baku to the Mediterranean Sea. Construction of this pipeline began in August 2002 and was completed in 2006.

TOTAL and SOCAR also have signed an exploration, development and production sharing agreement in February 2009 for a permit located on the offshore Absheron block. During the exploration phase, TOTAL will be the operator of the block. For the development


phase, TOTAL and SOCAR will create a company to conduct operations, with the partners holding, respectively, 60% and 40%.

TOTAL has been present inKazakhstan since 1992 through the interest it holds in the North Caspian Sea permit, which includes notably the Kashagan field. The size of this field may eventually allow production to reach nearly 1,500 kboe/d (in 100%).

On October 31, 2008, members of the NCSPSA consortium and the Kazakh authorities signed a number of agreements to end the disagreement that began at the end of August 2007. The implementation of these agreements 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. NCOC started operating the field in January 2009. NCOC supervises and coordinates NCSPSA’s activities and is directly responsible for scheduling, reservoir modeling, conceptual development studies and relations with the Kazakh authorities. NCOC uses TOTAL’s management system. The company’s chief executive officer is also an executive from TOTAL.

In February 2004, the Kazakh authorities approved the development plan for this field, allowing work to begin on the first of several successive phases of development.

Drilling of development wells, which beganphase.

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 19.40% within three years. In December 2011, TOTAL increased its stake in 2004, continued in 2008 and production is expectedNovatek by 2% to begin late in 2012.14.09%.

TOTAL has been present inRussia since 1989. In 2008, production from the Kharyaga field (50%, operator) averaged 8 kboe/d, similar to 2006 and 2007.

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.

 

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In July 2007, TOTAL and Gazprom signed a cooperation agreement for the first phase of development on the Shtokman gas and condensates field, covering the design, construction, financing and operation of future facilities. Shtokman Development AG (TOTAL, 25%) was established in February 2008 to operate this first development phase of the project, designed to produce 23.7 Bm3/y of natural gas (nearly 2.3 Bcf/d), approximately 50% of which will be used to supply an LNG plant with a capacity of 7.5 Mt/y. The main technology challenges related to this project have been addressed and engineering studies have been launched for an investment decision expected in 2010.

On the Kharyaga field, the development plan for phase 3 was approved in December 2007. This

phase has an expected production plateau of 30 kboe/d (in 100%) by around 2011. Work on this development is proceeding on schedule.

Europe

In 2008, TOTAL’s production in this zone reached 616 kboe/d, representing 26% of the Group’s overall production, compared to 674 kboe/d in 2007 and 728 kboe/d in 2006.

In Norway, highlights of the 2006-2008 period included the start-up of the Snøhvit field, the increase of the Group’s interest in the PL211 permit (Victoria) and new developments on existing fields. In the UK, production began on satellites of Alwyn (Jura, discovered in 2006) and Elgin-Franklin (Glenelg, West Franklin) as well as on the Maria field.

In both countries, TOTAL made several major discoveries and was awarded new exploration permits.

InFrance, the Group has operated fieldssince 1939, notably the Lacq (100%) and Meillon (100%) gas fields, located in the southwest. The Group’s production was 25 kboe/d in 2008, down from 27 kboe/d in 2007 and 30 kboe/d in 2006.

The Group’s most significant production activity in France has been on the Lacq field, which began in 1957. A pilot project to capture, inject and store carbon dioxide is proceeding at this site. In connection with this project, a gas burning plant is being modified to operate in an oxy-combustion environment and the carbon dioxide produced is to be re-injected in the depleted Rousse field. The plant is expected to be operational by mid-2009. As part of the Group’s sustainable development policy, this project will allow the Group to assess one of the technological possibilities for reducing emissions of carbon dioxide into the atmosphere.

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.

The plan of extending the Tarente refinery export system, which is necessary for the development of the Tempa Rossa field, will be submitted to the Italian authorities in 2009. The partners in the Tempa Rossa field are then expected to make the final investment decision regarding the project, subject to the condition that the commercial offers for the principal engineering and construction contracts are competitive, failing which a new call for tenders may be launched. Proceedings initiated by the Prosecutor of the Potenza Court against Total Italia could also delay this project.


Site preparation work started in August 2008. Depending on the date the principal contracts are awarded, production is planned to begin in 2012 or 2013, with a plateau production of 50 kb/d.

InNorway, where the Group has been present since the late 1960s, TOTAL holds interests in seventy-four production permits on the Norwegian continental shelf, thirteen of which it operates. Norway is the largest single-country contributor to the Group’s production, with 334 kboe/d in 2008, compared to 338 kboe/d in 2007 and 372 kboe/d in 2006.

In the Norwegian North Sea, the most significant

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 southern region. On this zone, production reached 139 kboe/dsouth. The Group owns a 39.9% stake in 2008, benefiting from the start-upEkofisk 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, Growth project (EAG) in October 2005.

In the Haltenbanken arealocated in the Norwegian Sea, the Åasgard (7.7%), Mikkel (7.7%)north and Kristin (6%) fields contributed nearly 13% of the Group’s Norwegian production. Production on the Tyrihans oil, gas and condensates field (23.2%) is expected to begin in July 2009. Yttergryta (24.5%), a satellite of Åasgard, started production in January 2009, and Morvin (6%), a satellite of Åasgard, is expected to be commissioned in August 2010.

Drilling of an appraisal well on the undeveloped Victoria discovery began in January 2009. Victoria, operated by TOTAL, is part of the PL 211 license in which the Group increased its interest from 20%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 40%the authorities in 2006.

In the Barents Sea, the Snøhvit project (18.4%) startedearly 2012. Approval is expected in August 2007. This project includes both the development2012, with production start-up scheduled for 2016.

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A number of the natural gas field and the construction of the associated liquefaction facilities.

Between 2006 and 2008,successful exploration and appraisal work occurredactivities 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 various permits, notablylicense PL102C (40%, operator), a fast-track development project has been launched for the Onyx SW discovery (PL 255, 20%Atla field (formerly known as David), which was discovered in 2010. Start-up of gas 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 central section of the North Sea, started in April 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 2012.

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The Stjerne project was launched in 2011 to develop the Katla structure discovered in 2009, located on license PL104 (10%) on which a successfulsouth of Oseberg in the Nordic North Sea. Start-up of oil production is expected in 2013.

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The fast-track development project for the Vigdis North East structure (PL089, 5.6%), discovered 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 2007. Tornerose (PL 110 B, 18.4%2010 on the southern slope of the Dagny-Ermintrude structure (6.54%) and Kvitebjørn-Valemon (PL 193, 5%) were also successfully appraised in 2006. In 2008,north of Sleipner. Approval of the oil discovery on Dagny (12%) anddevelopment project is expected at the Pandora discovery, in the Visund zone, significantly increased the potentialend of this zone.

TOTAL has been conducting natural gas exploration2012 and production activitiesis scheduled to start inThe Netherlands and on the North Sea continental shelf since 1964. In 2008, the Group’s production amounted to 44 kboe/d, compared to 45 kboe/d in 2007 and 44 kboe/d in 2006. late 2016.

TOTAL owns twenty-three offshore production permits, nineteen of which are operated, and one operated exploration permit. In February 2008, the Group was awarded an interest of 16.92% in the E17c exploration permit.

Pursuant to an agreement signed in August 2008, TOTAL acquired Goal Petroleum (Netherlands) B.V. This acquisition is expected to increase the Group’s production by 8 kboe/d by 2011.

On the K5F sub-sea field (40.39%, operator), production began in September 2008.

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.

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 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 indirect stake in Qalhat LNG through its stake in Oman LNG.

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.
(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.

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.24.50x

(a)Interest of Total Gabon. The Group has a 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

(1)Based on publicly available information; upstream and downstream LNG portfolios.
(2)The Exploration & Production division is in charge of the Group's natural gas liquefaction and production operations.

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

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.

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).

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

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

InAbu Dhabi, the Taweelah A1 plant combines electricity generation and water desalination. It is owned by Gulf Total Tractebel Power Cy, in which TOTAL holds a 20% stake. The Taweelah A1 power plant, in operation since 2003, currently has net power generation capacity of 1,600 MW and water desalination capacity of 385,000 m3 per day. The plant’s production is sold to Abu Dhabi Water and Electricity Company (ADWEC) as part of a long-term agreement.

InNigeria, TOTAL and its partner, the state-owned Nigerian National Petroleum 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

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 2012 and commissioning is scheduled in the first half of 2014 in open-cycle and in early 2015 in closed-cycle. The power plant will be connected to the existing production and transport facilities. K5F is the first project in the world to use only electrically driven sub-sea well heads and systems. This advance in sub-sea technologies is expected to increase the reliability of systems and improve environmental performance. The development of the K5CU project (46.6%, operator) is expected to take place from 2009 to 2011. This project is designed to include four wells supported bypower grid through a new platform connected to the K5A platform by a 15108 km gas pipeline.high-voltage transmission line.

TOTAL has been present in theUnited Kingdom since 1962. The Group’s production reached 213 kboe/d in 2008 compared to 264 kboe/d in 2007 and 282 kboe/d in 2006. The UK accounts for nearly 9% of the Group’s overall production. 82% of this production comes from operated fields located in two zones: the Alwyn zone in the northern North Sea, and the Elgin-Franklin zone in the Central Graben. In addition, the Tormore discovery in 2007 led the Group and its partners to consider the joint development of the Laggan/Tormore fields, located west of the Shetland Islands and to select the development plan.

InThailand, TOTAL owns 28% of Eastern Power and Electric Company Ltd, which operates the combined-cycle gas power plant in Bang Bo, with a capacity of 350 MW, in operation since 2003. The plant’s production is sold to the Electricity Generating Authority of Thailand 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 is closely monitoring nuclear power generation and its outlook.

Electricity from renewable energy sources

In concentrated solar power, TOTAL, in partnership with Spanish company Abengoa Solar, won the call for tenders for the construction and 20-year operation of a 109 MW concentrated solar power plant in Abu Dhabi. The Shams project (TOTAL, 20%) is being carried out in partnership with Masdar through the Abu Dhabi Future Energy Company, which holds a 60% stake in the project. Construction work started in July 2010 and start-up is expected during the second semester of 2012. The plant’s production will be sold to 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 26.6% share in Scotrenewables Marine Power, located in the Orkney Islands in Scotland. Tests are being conducted on a 250 kW prototype.

Solar energy

TOTAL is developing upstream operations through industrial production and downstream marketing activities in the photovoltaic sector based on crystalline silicon technology. The Group is also pursuing R&D in this field through several partnerships, as well as in the fields of thin films, transverse systems research and 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.

Solar photovoltaic

SunPower

In June 2011, following a friendly takeover bid, TOTAL acquired 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 designs, manufactures and supplies the highest-efficiency solar panels in the 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 a capacity 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 solar photovoltaic systems. In October 2011, TOTAL became the sole 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 have a total capacity of nearly 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 SunPower.

Photovoltech

TOTAL holds a 50% interest in Photovoltech, a Belgian company specialized in manufacturing multicrystalline photovoltaic cells. In 2011, Photovoltech finalized the ramp-up of its third production line, raising the total production capacity of its plant in Tienen, Belgium to 155 MWp/y.

Other assets

In 2011, TOTAL began the construction of a solar panel production and assembly plant in the northeastern region of Moselle in France, which is expected to begin operations in 2012 with an overall capacity of 44 MWp/y.

In addition, Tenesol’s overseas activities remain 50-50 subsidiaries of TOTAL and EDF through a new company named Sunzil.

Finally, the Group is continuing its projects to display solar application solutions as part of decentralized rural electrification projects in a number of countries, including in South Africa via Kwazulu Energy Services Company (KES) in which TOTAL holds a 35% stake. New projects are being 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.

In the 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 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 technologies, the Group acquired approximately 25% of the U.S. start-up Konarka in 2008. Since 2009, Konarka Technologies Inc has carried out research projects in cooperation with TOTAL to develop solar film on a large scale.

Regarding solar energy storage, TOTAL entered in 2009 into a research agreement with the Massachusetts Institute of Technology (MIT) in the United States to develop a new stationary battery technology.

Biotechnologies — conversion of biomass

TOTAL is exploring a number of avenues for developing biomass depending on the resource used, the nature of the target markets (e.g., fuels, lubricants, petrochemicals, specialty chemicals) and the conversion processes.

The Group has chosen to target the two primary conversion processes: biological and thermochemical.

In June 2010, TOTAL entered into a strategic partnership with Amyris Inc., a U.S. start-up specializing in biotechnologies. The Group acquired a stake in Amyris’ share capital (21.28% as of February 24, 2012) and signed a collaboration framework agreement that includes research, development, production and marketing partnerships with 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 sugars 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. Industrial production of farnesene began in 2011 at three partner sites (in Brazil, the United States and Spain) representing a nominal annual capacity of 50,000 m³. A fourth production site is as well under construction and shall be completed in 2012.

In addition, the Group continues to develop a network of R&D partnerships, including with the Joint BioEnergy Institute (JBEI) Novogy (United States), the University of Wageningen (Holland) and the Toulouse White Biotechnology consortium (TWB) (France) in technology segments that are complementary with Amyris’ platform: deconstruction of 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 the energy and chemicals markets.

Carbochemistry

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 French IFP Énergies Nouvelles (French Institute for Oil and 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 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 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

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 the start-up of production on the Dorstfontein East mine in 2011, the subsidiary Total Coal South Africa (TCSA) owns and operates five mines in South Africa. The Group continues to study other projects aimed at developing its mining resources.

The South African coal produced by TCSA or bought from third-parties’ mines is either marketed locally or exported through the port of Richard’s Bay, in which TOTAL holds a 5.7% interest.

DOWNSTREAM

On the Alwyn zone, the start-up of production from satellites or new reservoir compartments allowed the potential for production to remain at a level near to the processing and compressing capacities of the platform (530 Mcf/d of gas increased to 575 Mcf/d during the summer 2008 planned shutdown for heavy maintenance). In addition, wells drilled on the Alwyn North field (N49 and N50) discovered new reserves, in production since 2007.

The Jura field (100%), discovered late in 2006, started production in May 2008 through two sub-sea wells connected to the pipeline linking Forvie North and Alwyn. The production capacity of this field is 50 kboe/d (gas and condensates).

A second gas and condensates dicovery, Islay (100%), located in a faulted panel immediately east of Jura, was made in 2008. Development studies for this discovery are underway.


Late in 2008, TOTAL increased its interest in the Otter field, from 54.30% to 81.00%.

The development of the Elgin-Franklin zone, in production since 2001, made a significant contribution to the Group’s activities in the UK. This investment constituted a technical milestone, combining the development of the deepest reservoirs in the North Sea (5,500 m) with temperature and pressure conditions among the highest in the world (1,100 bars and 190°C).

The development of the Elgin and Franklin operated satellites (respectively Glenelg, 49.5% and West Franklin, 46.2%) started in 2005 with the drilling of the Glenelg well, which came onstream in March 2006. The first well of West Franklin (F7) started production in September 2007 at a rate of 13 kboe/d. A second well, F9, was drilled on this field and production started in September 2008 at a rate of nearly 25 kboe/d. Anticipated production for this field over its life is estimated to total approximately 200 Mboe (in 100%).

On the Elgin field, drilling of an infill well started in October 2008. A similar well was completed on the Franklin field in 2007. Drilling of such a well in a high pressure/high temperature depleted field is a significant technical milestone.

As part of an agreement signed in 2005, TOTAL acquired a 25% interest in two blocks located near Elgin-Franklin by drilling an appraisal well on the Kessog structure. This well, for which drilling operations were completed in May 2007, discovered an oil and gas column exceeding expectations. In addition, this agreement makes it possible for the Group to increase its interest to 50% on this zone by carrying out a long-duration test on this well. This test is expected to be completed in the second quarter 2009. If the development of Kessog were approved, TOTAL would be the operator.

In the West Shetland zone, a successful exploration well was drilled on the Tormore prospect, located 15 km southwest of the Laggan field. Development studies allowed the Group and its partners to select a joint development plan for both fields, using sub-sea facilities and off-gas treatment (gas and condensates) at a plant in Sullom Voe in the Shetland Islands. The gas would be exported to the Saint-Fergus terminal via a new pipeline connected to the Frigg pipeline (FUKA). Basic engineering studies for the development have been launched and production is expected to begin in 2013.

TOTAL also owns interests in a number of assets operated by third parties, notably in the Bruce and Maria

fields. The Bruce field, where a new drilling campaign started in 2008, is the most significant among them. The development of the Maria field was completed and production began in December 2007.

Middle East

TOTAL has been developing long-term partnerships in this region since 1924. The Middle East is one of the major growth regions for the Group over the medium term, with the Yemen LNG and Qatargas II projects expected to start production in 2009. Highlights of 2007 included the start-up of the Dolphin gas project in Qatar, which achieved plateau production in the first quarter 2008.

In 2008, TOTAL’s production in the Middle East (including production of equity affiliates and non-consolidated subsidiaries) was 432 kboe/d, representing 18% of the Group’s overall production, compared to 390 kboe/d in 2007 and 406 kboe/d in 2006.

InSaudi Arabia, following disappointing exploration results and pursuant to contractual arrangements, the Group withdrew in early 2008 from the joint venture with Saudi Aramco, the state-owned oil company.

In theUnited Arab Emirates, where the Group has been present since 1939, TOTAL’s production was 243 kboe/d in 2008, compared to 242 kboe/d in 2007 and 267 kboe/d in 2006.

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

TOTAL signed in 2009 the agreements for a 20-year extension of its participation in the GASCO joint venture.

The Group also holds a 33.3% interest in Ruwais Fertilizer Industries (FERTIL), which produces ammonia and urea. In 2005, FERTIL’s corporate life was extended for an additional 25 years. In Dubai, pursuant to an agreement signed with government and international partners in 2006, the concession in which TOTAL had participated was terminated.


InIraq, TOTAL was prequalified by the Iraqi Ministry of Oil to participate in the bidding process related to the development of Iraqi oil fields. TOTAL is pursuing its significant training program for Iraqi engineers.

InIran, the Group’s production, under buyback agreements, amounted to 9 kboe/d in 2008, compared to 15 kboe/d in 2007 and 20 kboe/d in 2006.

InOman, the Group’s production amounted to 34 kboe/d in 2008 and 2007, compared to 35 kboe/d in 2006. The Group is present in oil production on Blocks 6 and 53 as well as in liquefied natural gas production through its interests in the Oman LNG (5.54%)/Qalhat LNG (2.04%(1)) gas liquefaction plant, which has a capacity of 10.5 Mt/y.

TOTAL has been present inQatarsince 1936 and holds interests in the Al Khalij and North fields, the Dolphin project, the Qatargas I liquefaction plant and the second train of Qatargas II. The Group’s production (including its share in the production of equity affiliates) averaged 121 kboe/d in 2008, up from 74 kboe/d in 2007 and 58 kboe/d in 2006. This production increased significantly with the ramp-up of the Dolphin project.

Production from the Dolphin project (24.5%) started during the summer of 2007 and reached its full capacity in the first quarter 2008. On the North field, the Group signed a contract with state-owned Qatar Petroleum in December 2001 providing for the sale of 2 Bcf/d of gas produced by the Dolphin project, for a 25-year period. This gas is carried to the United Arab Emirates through a 360 km pipeline.

In July 2006, TOTAL signed four contracts providing for the purchase by the Group of 5.2 Mt/y of LNG and formalized in December 2006 its acquisition of a 16.7% interest in the second train of Qatargas II. This integrated project includes the development of

two new LNG trains, each with a capacity of 7.8 Mt/y. Commissioning is expected in 2009.

TOTAL is present inSyria on the Deir Ez Zor permit (100%, operated by DEZPC, of which 50% is owned by TOTAL). The Group’s production was 15 kboe/d in 2008 and 2007 compared to 17 kboe/d in 2006.

In 2008, TOTAL signed three agreements with the Syrian authorities. The first agreement provides for a 10-year extension of the Deir Ez Zor permit, until 2021. The second sets forth the principles to be incorporated into a final agreement concerning the increase in production on the Tabiyeh gas and condensates field. TOTAL also signed a framework agreement related to the development of oil projects in partnership with the state-owned companies, Syrian Petroleum Company and Syrian Gas Company.

TOTAL has been present inYemen since 1987. In 2008, the Group’s production amounted to 10 kboe/d, compared to 9 kboe/d in 2007 and 2006. TOTAL has interests in the country’s two oil basins, as the operator on Block 10 (Masila Basin, East Shabwa permit, 28.57%) and as a partner on Block 5 (Marib Basin, Jannah permit, 15%). TOTAL also has an interest of 39.62% in the Yemen LNG project.

The commissioning of Yemen LNG is expected in the second quarter 2009. This LNG project, launched in August 2005, calls for the construction of two LNG liquefaction trains with a capacity of 6.7 Mt/y, all of which has been sold under long-term contracts.

In 2008, TOTAL strengthened its position in offshore exploration through the acquisition of a 30.9% interest in Block 70 following the purchase of a 40% share in Blocks 69 and 71 in 2007. Results of the first well drilled on Block 71 are currently being assessed.


 

 

(1)Indirect interest through the 36.8% share of Qalhat LNG owned by Oman LNG.

Interests in pipelines

The table below sets forth TOTAL’s interests in crude oil and natural gas pipelines throughout the world:

The 2011 Downstream segment comprised 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:

 

As of December 31, 2008

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.

Pipeline(s)

OriginDestination

%

interest

OperatorLiquidsGas
EUROPE
France

TIGF

Network South West100.00xx
Norway

Frostpipe (inhibited)

Lille-Frigg, FroyOseberg36.25x

Gassled(a)

7.995x

Heimdal to Brae Condensate

HeimdalBrae16.76x

Line

Kvitebjørn pipeline

KvitebjørnMongstad5.00x

Norpipe Oil

Ekofisk Treatment centerTeeside (UK)34.93x

Oseberg Transport System

Oseberg, Brage and VeslefrikkSture8.65x

Sleipner East Condensate Pipe

Sleipner EastKarsto10.00x

Troll Oil Pipeline I and II

Troll B and CVestprosess (Mongstad refinery)3.70x
The Netherlands

Nogat pipeline

F3-FBDen Helder23.19x

WGT K13-Den Helder

K13A-K4/K5Den Helder4.66x

WGT K13-Extension

MarkhamK13-K4/K523.00x
United Kingdom

Alwyn Liquid Export Line

Alwyn NorthCormorant100.00xx

Bruce Liquid Export Line

BruceForties (Unity)43.25x

Central Area Transmission

Cats Riser PlatformTeeside0.57x

System (CATS)

Central Graben

Elgin-FranklinETAP15.885x

Liquid Export Line (LEP)

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
AFRICA
Algeria

Medgas

AlgeriaSpain9.77(b)x

Gabon

Mandji Pipe

Mandji fieldsCap Lopez Terminal100.00(c)xx

Rabi Pipe

RabiCap Lopez Terminal100.00(c)xx
AMERICAS

Argentina

Gas Andes

Neuquen Basin (Argentina)Santiago (Chile)56.50xx

TGN

Network (Northern Argentina)15.40xx

TGM

TGNUruguyana (Brazil)32.68xx

Bolivia

Transierra

Yacuiba (Bolivia)Rio Grande (Bolivia)11.00x

Brazil

TBG

Bolivia-Brazil borderPorto Alegre via São Paulo9.67x

TSB (project)

TGM (Argentina)TBG (Porto Alegre)25.00x

Colombia

Ocensa

Cusiana, CupiaguaCovenas Terminal15.20x

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)5.00x

SCP

Baku (Azerbaijan)Georgia/Turkey Border10.00x

Dolphin (International transport and network)

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

 

(a)Gassled: unitization of Norwegian gas pipelines through a new joint venture in which TOTAL has an interest of 7.995%. In addition to the direct share in Gassled, TOTAL has a 14.4% interest in the joint-stock company 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 57.96% in Total Gabon.

Gas & Power

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 2,088 kb/d at year end 2011, compared to 2,363 kb/d in 2010 and 2,594 kb/d in 2009. The Group’s worldwide refined products sales (including trading operations) in 2011 were 3,639 kb/d, compared to 3,776 kb/d in 2010 and 3,616 kb/d in 2009.

TOTAL is among the largest refiners/marketers in Western Europe(1), and the leading marketer in Africa(2).

Directly or via its holdings, TOTAL has a worldwide retail network of 14,819 service stations at year end 2011, compared to 17,490 in 2010 and 16,299 in 2009. Through its retail network, TOTAL provides fuels to more than 3 million customers every day. In addition, TOTAL 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 growing demand worldwide, mainly in non-OECD countries, by focusing on three areas:

adapting to mature markets in Europe;

developing its positions in growth markets (Africa, Asia and the Middle East); and

developing specialty products worldwide.

In July 2011, TOTAL closed the sale to IPIC of its 48.83% stake in CEPSA as part of a public takeover bid on the entire share capital of CEPSA. With respect to Refining & Marketing operations, this sale concerns mainly four Spanish refineries (Huelva, Algeciras, Tenerife, 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 has equity stakes in twenty refineries (including ten that it operates), located in Europe, the United States, the French West Indies, Africa and China.

In 2011, TOTAL continued its program of selective investments in Refining, which 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 increasing 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.

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 emphasis to diesel. For this purpose, the investments will result in the eventual reduction of the annual distillation capacity to 12 Mt from 16 Mt, upsizing the distillate hydrocracker and improving energy efficiency by lowering carbon dioxide emissions. The new structure is expected to become operational at the end of 2013.

In summer 2010, the Group divested 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)

The Gas & Power division is focusedBased on the optimization of the Group’s gas resources through marketing, trading, transport of natural gaspublicly available information, refining capacities and liquefied natural gas (LNG), LNG re-gasification and natural gas storage.

The division also contributes to the Group’s activities in the following areas:

liquefied petroleum gas (LPG) shipping and trading;

coal production, marketing and trading;

power generation from gas-fired power plants or renewable energies;

trading and marketing of electricity; and

solar power systems (through its subsidiaries Tenesol and Photovoltech).

The Gas & Power division also conducts research and development related to alternative energies as complementary energy resources to oil and gas.

Natural Gas

In 2008, TOTAL pursued its strategy of developing its activities downstream from natural gas production in order to optimize access for the Group’s current and future gas production and reserves to traditional markets (with long-term contracts between producers and integrated gas companies) and to markets open to international competition (including short-term contracts and spot sales).

The long-term contracts under which TOTAL sells its natural gas production 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. In most cases, price formulas induce a time-lag or an adjustment over time to reflect changes in oil indexes.

In the context of deregulated natural gas markets, which allow customers to more freely access suppliers, in turn leading to new marketing methods that are more flexible than traditional long-term contracts, TOTAL is developing trading, marketing and logistics activities to offer its natural gas production directly to customers, primarily in the industrial and commercial markets.

Europe

TOTAL has been active in the downstream sector of the gas value chain in Europe for more than sixty years.

Natural gas transport, marketing and storage activities were initially developed to complement the Group’s domestic production in Lacq (France). The Group further developed these activities upon additional gas discoveries, and they are now part of its comprehensive downstream gas chain.

The Group’s transport and storage activities in southwestFrance are grouped under TIGF, a wholly-owned subsidiary of the Group. This subsidiary operates a regulated transport network of 4,905 km of gas pipelines, as well as two storage units with 84 Bcf

(2.4 Bm3) of combined usable capacity, representing approximately 20% of the overall natural gas storage capacity in France(1). Highlights of 2008 included:

•

Obtaining the authorization, pursuant to an April 9, 2008 decree, to increase the storage capacity of the Lussagnet site from 84 Bcf (2.4 Bm3) to 124 Bcf (3.5 Bm3) over a period of eleven years.

The start-up, on November 7, 2008, of the Artère de Guyenne gas pipeline. This pipeline (70 km long and 900 mm in diameter) connects Captieux and Mouliets-et-Villemartin and will allow the flow of gas from the Fos Cavaou LNG terminal to the north of France.

In addition to retaining its Quality, Security and Environment certification, TIGF was awarded an HEQ (High Environmental Quality) certification for its office and technical buildings at the Lussagnet site.

The participation of TIGF in Gas Powernext, a gas trading exchange.

The active participation of TIGF in the development of Franco-Spanish interconnections as part of ERGEG (European Regulator Group for Electricity and Gas).

Regarding TOTAL’s marketing activities:

•

InSpain, TOTAL has marketed gas in the industrial and commercial sectors since 2001 through its participation in Cepsa Gas Comercializadora. This company is held by TOTAL (35%), CEPSA (35%) and the Algerian national oil company, Sonatrach (30%). Taking into account TOTAL’s


(1)quantities sold.

GIE data (Gaz Infrastructure Europe), February 2008.

48.83% interest in CEPSA, the Group has a combined direct and indirect interest of approximately 52% in this company. In 2008, Cepsa Gas Comercializadora sold approximately 70 Bcf (2 Bm3) of natural gas to industrial and commercial customers, compared to approximately 59 Bcf (1.7 Bm3) in 2007 and 49 Bcf (1.4 Bm3) in 2006. CEPSA also has a 20% interest in the Medgaz pipeline project which directly connects Algeria to Spain.

•

InFrance, TOTAL sold 229 Bcf (6.5 Bm3) of gas in 2008 through its marketing subsidiary Total Énergie Gaz (TEGAZ), compared to 245 Bcf (7 Bm3) in 2007 and 240 Bcf (6.9 Bm3) in 2006.

•

In theUnited Kingdom, TOTAL’s subsidiary Total Gas & Power Ltd sells gas and power to the industrial and commercial markets. This subsidiary also conducts global gas, electricity and LNG trading activities. In 2008, Total Gas & Power Ltd sold 134 Bcf (3.8 Bm3) of natural gas to industrial and commercial customers, compared to 124 Bcf (3.5 Bm3) in 2007 and 134 Bcf (3.8 Bm3) in 2006. Electricity sales amounted to 4.6 TWh in 2008, compared to 3.6 TWh in 2007 and 3.2 TWh in 2006. In 2007, TOTAL disposed of its 10% interest in Interconnector UK Ltd, a gas pipeline connecting Bacton in the UK to Zeebrugge in Belgium. This disposal did not affect TOTAL’s rights to transport gas through the pipeline.

The Americas

In theUnited States, TOTAL marketed approximately 1,652 Bcf (46.9 Bm3) of natural gas in 2008, compared to approximately 1,606 Bcf (45.5 Bm3) in 2007 and 923 Bcf (26.2 Bm3) in 2006, supplied by its own production and external sources.

InMexico, Gas del Litoral, a company in which TOTAL holds a 25% interest, sold approximately 173 Bcf (4.9 Bm3) of natural gas in 2008, its second full year of activity, compared to 95 Bcf (2.7 Bm3) in 2007 and 25 Bcf (0.7 Bm3) in 2006.

InSouth America, TOTAL owns interests in several natural gas transport companies in Argentina, Chile and Brazil, including the following:

a 15.4% interest in Transportadora de Gas del Norte (TGN), which operates a gas transport network covering the northern half of Argentina;

a 56.5% interest in the companies that own the GasAndes pipeline, which connects the TGN network to the Santiago del Chile region; and

a 9.7% interest in Transportadora Gasoducto Bolivia-Brasil (TBG), whose gas pipeline supplies southern Brazil from the Bolivian border.

These different assets represent a total integrated network of approximately 9,000 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.

The actions taken by the Argentine government after the 2001 economic crisis and the subsequent energy crisis, marked in 2007 by a severe gas shortage during the austral winter, put TOTAL’s Argentine subsidiaries in difficult financial and operational situations, even after taking into account the restructuring of TGN’s debt, which was completed in 2006. The sale of the Group’s Argentine power generation assets was completed in 2007, while procedures to protect TOTAL’s investments, initiated in 2002, are ongoing.

In 2008, the fall in domestic gas production in Argentina considerably reduced gas export flows to Chile.

Asia

TOTAL markets natural gas transported through pipelines in Indonesia, Thailand and Myanmar, and, in the form of LNG, to Japan, South Korea, China, Taiwan and India. The Group is also developing new outlets for re-gasified LNG in emerging markets.

In India, Hazira LNG Private Limited, a company in which TOTAL holds a 26% interest, sold approximately 87 Bcf (2.5 Bm3) of natural gas in 2008, its third full year in operation, compared to 76 Bcf (2.2 Bm3) in 2007 and 28 Bcf (0.8 Bm3) in 2006.

Liquefied Natural Gas

The Gas & Power division conducts LNG activities downstream from liquefaction plants,(1) including LNG shipping, re-gasification, storage and marketing.

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 UK) and Asia (India). This diversified access to markets allows TOTAL to develop new liquefaction projects, in particular in the Middle East and Africa, while strengthening its own LNG supply portfolio.


(1)Natural gas liquefaction activities are conducted by the Exploration & Production division.

Europe

InFrance, TOTAL acquired in June 2006 a 30.3% interest in the Société du Terminal Méthanier de Fos Cavaou (STMFC). This terminal is expected to have a re-gasification capacity of 291 Bcf/y (8.25 Bm3/y), of which 79 Bcf/y (2.25 Bm3/y) has been reserved by TOTAL through its subsidiary Total Gas & Power Ltd. The terminal is scheduled to come onstream commercially in the second half 2009.

In December 2006, in connection with its entry in the Qatargas II project, TOTAL acquired an 8.35% interest in the South Hook LNG re-gasification terminal project in theUnited Kingdom. The terminal is scheduled to come onstream in the first half 2009.

In addition, as part of the Snøhvit project (Norway), in which TOTAL holds an 18.4% interest and where the first deliveries started in October 2007, Total Gas & Power Ltd signed in November 2004 a purchase agreement for 35 Bcf/y (1 Bm3/y) of natural gas primarily intended for North America and Europe. TOTAL, through its subsidiary Total E&P Norge AS, chartered an LNG tanker, the Arctic Lady, to transport this LNG. This tanker has a capacity of 145,000 m3 and was delivered in April 2006.

In October 2007, TOTAL announced the creation of Adria LNG, in which TOTAL holds a 25.58% interest, to study the construction of an LNG re-gasification terminal on KrK Island (Croatia), in the northern Adriatic Sea. This terminal is expected to have an initial natural gas re-gasification capacity of 353 Bcf/y (10 Bm3/y), which could be subsequently increased to 494 Bcf/y (14 Bm3/y).

In addition, TOTAL holds a 30% interest in Gaztransport & Technigaz (GTT) which primarily focuses on the design and engineering of membrane cryogenic tanks dedicated to LNG tankers. As of December 31, 2008, 193 active LNG tankers were equipped with membrane tanks built under GTT licenses out of a world tonnage estimated at 302 LNG tankers.(1)

North America

InMexico, the Altamira re-gasification terminal, in which TOTAL holds a 25% interest, has been onstream since summer 2006. This terminal, located on the east coast of Mexico, has an initial LNG re-gasification capacity of 236 Bcf/y (6.7 Bm3/y). This capacity has been entirely reserved by Gas del Litoral, in which TOTAL has a 25% interest. The terminal received forty-two cargos in 2008, compared to thirty-three in 2007.

In theUnited States, TOTAL has reserved re-gasification capacity of 10 Bm3/y (1 Bcf/d) at the Sabine Pass LNG terminal in Louisiana, beginning in April 2009 for a renewable 20-year period. The terminal was inaugurated in April 2008. The LNG to supply Sabine Pass is expected to come from LNG purchase agreements providing for shipments from various producing projects worldwide in which TOTAL holds interests, notably in the Middle East, Norway and West Africa.

Asia

The Hazira re-gasification terminal, located on the west coast ofIndia in the Gujarat state, was inaugurated in April 2005. It had an initial re-gasification capacity of approximately 120 Bcf/y (3.4 Bm3/y). At the end of 2008, its capacity reached 177 Bcf/y (5 Bm3/y) after debottlenecking operations were conducted during the year.

TOTAL has held a 26% interest in the Hazira merchant terminal since May 2005. Its activities include LNG re-gasification and natural gas marketing. TOTAL has agreed to provide up to 26% of the LNG for the Hazira terminal. Due to market conditions in 2008, the Hazira terminal 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. Thirty cargos were delivered in 2008, compared to twenty-eight in 2007 and twelve in 2006.

On December 10, 2008, TOTAL, through its subsidiary Total Gas & Power Ltd, signed an LNG sale agreement with China National Offshore Oil Company (CNOOC). As part of this agreement, TOTAL is expected to supply CNOOC with up to 1 Mt/y of LNG starting in 2010. The gas supplied will come from the Group’s global LNG resources.

Middle East

InQatar, pursuant to heads of agreement signed in February 2005, TOTAL signed purchase agreements in July 2006 for up to 5.2 Mt/y of LNG from Qatargas II (second train) over a 25-year period. This LNG is expected to be marketed principally in France, the UK and North America. In December 2006, TOTAL also concluded an agreement to acquire a 16.7% interest in the second train of Qatargas II. Start-up is expected in 2009.

InYemen, TOTAL, through its subsidiary Total Gas & Power Ltd, signed an agreement in July 2005 with Yemen LNG Ltd (in which TOTAL has a 39.62% interest) to purchase 2 Mt/y of LNG over a 20-year period, beginning in 2009, to be delivered to the United States. The Yemen LNG project is expected to come onstream in the second quarter of 2009.


(1)Gaztransport & Technigaz data.

Africa

InNigeria, as part of the expansion of the Nigeria LNG plant (NLNG), in which TOTAL holds a 15% interest, Total Gas & Power Ltd signed an LNG purchase agreement for an initial 0.23 Mt/y over a 20-year period, to which an additional 0.9 Mt/y was added when the sixth train came onstream. The first deliveries under this agreement were received in January 2006.

As part of an additional NLNG expansion project to build a seventh LNG train with a capacity of approximately 8.5 Mt/y, TOTAL signed a purchase agreement in February 2007 for 1.375 Mt/y of LNG over a 20-year period. This agreement is subject to NLNG’s final investment decision for this new train.

TOTAL also acquired a 17% interest in the Brass LNG project in Nigeria in July 2006. This liquefaction project calls for the construction of two liquefaction trains, each with a capacity of 5 Mt/y. TOTAL signed a preliminary agreement with Brass LNG Ltd in July 2006 setting forth the principal terms of an agreement to purchase approximately one-sixth of the plant’s capacity over a 20-year period. This LNG would be delivered primarily to North America and Western Europe. The purchase agreement is subject to final investment decision for the Brass LNG project.

InAngola, TOTAL holds a 13.6% interest in Angola LNG, a project to construct a single-train liquefaction plant with a capacity of 5.2 Mt/y. The construction of this project began in December 2007 and LNG production is expected to start in 2012. As part of the Angola LNG project, TOTAL, through its subsidiary Total Gas & Power North America, signed a regasified natural gas purchase agreement in December 2007 for 13.6% of the quantities to be delivered to the Gulf LNG Clean Energy terminal in Mississippi in the United States.

Trading

After a period from 2001 to 2006, when Total Gas & Power Ltd was mainly involved in short-term trading on the LNG cargos market, this subsidiary began to receive cargos in 2007 under its long-term supply contracts in Nigeria and Norway. In 2008, Total Gas & Power Ltd purchased twelve contractual cargos and twenty-two spot cargos from Nigeria, Egypt, Equatorial Guinea, Abu Dhabi, Oman and Trinidad & Tobago. This mix of spot and term LNG purchases allows TOTAL to supply its principal clients over the world with gas, while retaining a certain degree of flexibility to react to market opportunities or unexpected fluctuations in supply and demand.

Liquefied Petroleum Gas

In 2008, TOTAL traded and sold 5.2 Mt of LPG (butane and propane) worldwide (compared to 5.2 Mt in 2007 and 5.8 Mt in 2006), including approximately 1.4 Mt in the Middle East and Asia, approximately 0.7 Mt in Europe on small coastal trading vessels and approximately 3 Mt on large vessels in the Atlantic and Mediterranean regions. Approximately 40% of these quantities comes from fields or refineries operated by the Group. LPG trading involved the use of seven time-charters and approximately sixty spot charters. In 2008, this activity represented approximately 9% of the worldwide seaborne LPG trade(1).

In January 2008, SALPG (South Asian LPG Limited), a company in which TOTAL holds a 50% interest, in partnership with Hindustan Petroleum Company Ltd, announced the start-up of commercial operations at the underground import and storage LPG terminal located in Visakhapatnam, on the east coast of India in the state of Andhra Pradesh. This terminal, the first of its kind in India, has a storage capacity of 60 kt.

Electricity and Cogeneration

As a refiner and petrochemicals producer, TOTAL has interests in several cogeneration facilities. Cogeneration is a process whereby the steam produced to turn turbines to generate electricity is then captured and used for industrial purposes. TOTAL also participates in another type of cogeneration, which combines power generation with water desalination and gas-fired electricity generation, as part of its strategy of pursuing opportunities at all levels of the gas value chain.

The Taweelah A1 cogeneration plant inAbu Dhabi, in operation since May 2003, combines electricity generation and water desalination. It is owned and operated by Gulf Total Tractebel Power Cy, in which TOTAL has a 20% interest. The Taweelah A1 power plant currently has an overall power generation capacity of 1,430 MW and a water desalination capacity of 385,000 m3 per day. An additional development of 250 MW of capacity, under construction, is expected to enter into operation in the first half 2009.

Also in Abu Dhabi, TOTAL entered a partnership agreement in early 2008 with GDF Suez and Areva to propose the development of a nuclear power plant project, based on third generation EPR technology, to the local authorities at the appropriate time. The local authorities have launched a process to develop civil nuclear energy. This process includes the setting up of a national development organization and the


(1)Poten & partners LPG in world markets 2008.

publication of a specific law for the use of nuclear energy. To this end, authorities look to international best practices and follow the rules of transparency set forth by the International Atomic Energy Agency while also relying on partnerships with countries employing nuclear power technologies, such as France, the United States, the UK and Japan. Currently, the authorities have not yet made a decision on this project. This project would provide TOTAL with an opportunity to enter the nuclear energy production sector, building on its historical presence in the Emirates.

TOTAL entered into a partnership with the Spanish company Abengoa Solar to participate in a bidding process launched by Abu Dhabi Future Energy Company (ADFEC) in 2008 as part of the MASDAR initiative to support new energies. This call for tenders concerns the construction of a concentrated solar thermal plant.

InThailand, TOTAL owns 28% of Eastern Power and Electric Company Ltd (EPEC), which has operated the combined cycle gas power plant of Bang Bo, with a capacity of 350 MW, since March 2003.

InNigeria, TOTAL and its partner, the state-owned NNPC, are participating in two projects to construct gas-fired power generation units. These projects are part of the Nigerian government’s policy to develop power generation, stop gas flaring and privatize the power generation sector:

the Afam project, part of the SPDC (Shell Petroleum Development Company) joint venture in which TOTAL holds a 10% interest, concerns upgrading the Afam V power plant to increase its capacity to 276 MW and developing the Afam VI power plant, with a planned capacity of approximately 600 MW; and

the OML 58 project, part of the TEPNG (Total Exploration Production Nigeria) joint venture in which TOTAL holds a 40% interest (operator), concerns the development of a new 400 MW combined-cycle power plant near the city of Obite.

Renewable Energy

As part of its strategy to develop energy resources to complement oil and gas, TOTAL continued in 2008 to strengthen its positions in renewable energies, with a particular focus on solar-photovoltaic power where the Group has been present since 1983.

Solar-photovoltaic power

In solar-photovoltaic power (silicon-crystal technology), TOTAL is involved in upstream activities, with the

manufacturing of photovoltaic cells, and, in downstream activities, with the marketing of solar panels.

In partnership with GDF Suez and IMEC (Interuniversity MicroElectronics Centre), TOTAL owns 47.8% of Photovoltech, a company specialized in manufacturing high-efficiency photovoltaic cells. This company, whose production capacity is 80 MWp/y, has invested 45 M€ to increase the overall production capacity of its Tierlemont plant (Tienen, Belgium) to 140 MWp/y early in 2010. In 2008, Photovoltech announced a new project to increase the production capacity of photovoltaic cells to 260 MWp/y at its Tierlemont site in 2012. Photovoltech sales rose to approximately 106 M€ in 2008, compared to 73 M€ in 2007 and 42 M€ in 2006.

In addition, TOTAL holds a 50% interest in Tenesol, in partnership with EDF. Tenesol, whose headquarters are located in Lyon (France), designs, manufactures, markets and operates solar-photovoltaic power systems. Tenesol’s consolidated sales were 193 M€ in 2008, compared to 133 M€ in 2007 and 134 M€ in 2006, the equivalent of selling production of approximately 61.3 MWp. Its principal markets are for network connections in France and in the French Overseas Territories, and it is also active in certain professional applications (telecommunications, oil and gas sites, etc.). Tenesol owns two solar panel manufacturing plants: Tenesol Manufacturing in South Africa, with an annual production capacity of 60 MWp; and Tenesol Technologies in the Toulouse region of France, which trebled its production capacity in 2008 from 17 MWp/y to 50 MWp/y.

Temasol, a wholly-owned subsidiary of Tenesol in Morocco since the transfer in 2008 of the respective shares of Total Maroc and EDF EDEV, focuses on decentralized rural electrification activities. Since its creation in 2001, approximately 25,500 households have been equipped by Temasol.

TOTAL is pursuing additional decentralized rural electrification activities by responding to calls for tenders from authorities in several countries. In South Africa, KES (Kwazulu Energy Services Company), of which TOTAL owns 35%, was awarded an initial program in the Kwazulu-Natal province in 2002; late in 2008, approximately 8,000 isolated homes were equipped with individual decentralized systems. In 2008, the program was extended to the Eastern Cape province with the objective to equip approximately 26,000 households. In Mali, Korayé Kurumba (TOTAL, 30%), a company specialized in decentralized service, operated decentralized power micro-networks and individual solar photovoltaic kits, with approximately 500 customers at the end of 2008. In Yemen and Indonesia, studies are underway related to decentralized rural electrification projects as part of commitments to support local populations.


On December 10, 2008, TOTAL acquired, as a core industrial shareholder, an interest in the share capital of the U.S. start-up Konarka, which is specialized in the development ofthird generation organic solar technologies. With a significant interest of slightly below 20%, TOTAL is Konarka’s principal shareholder.

As part of the Group’s contribution to the “Grenelle de l’environnement” program launched by the French government in 2008, TOTAL established a subsidiary, Total Énergie Solaire, to develop photovoltaic projects. Total Énergie Solaire’s primary objectives are to carry out demonstration projects for educational purposes and to display different photovoltaic solutions at the Group’s sites. The selection of five industrialized sites was finalized in 2008 (Pau, Lacq, Provence refinery, Sara refinery and Cray Valley Sorgues) with an overall installed capacity of between 2 MWp and 3 MWp and an investment of 15 M€ in 2008 and 2009.

In addition, TOTAL plans to build a plant in the Carling region in eastern France to manufacture silicon wafers for the photovoltaic industry in partnership with GDF Suez.

Wind power

TOTAL operates a wind farm in Mardyck (near its Flanders refinery, located in Dunkirk, France). Mardyck, commissioned in November 2003, has a capacity of 12 MW and produced approximately 29.5 GWh of electricity in 2008, compared to an annual average of 24.7 GWh from 2005 to 2007.

TOTAL has decided to dispose of certain of its wind farm projects.

Marine energy

In marine energy, TOTAL acquired a 10% interest in a pilot project located offshore Santona, on the northern coast of Spain, in June 2005. The construction of a first buoy, with a capacity of 40 kW, was completed and the buoy was put into the water in September 2008. This project is intended to assess the technical and economic potential of this technology.

With respect to tidal current energy, TOTAL held as of the end of 2007 a 24.9% interest in Scotrenewables Marine Power, located in the Orkney Islands in Scotland. Agreements bringing new partners into the company’s share capital were signed in January 2008. As a result, the Group’s participation was diluted to 16%. Scotrenewables Marine Power is developing tidal current energy converter technology. A 1/5 scale model is expected to be tested offshore in 2009. Construction of a full-scale prototype is scheduled for 2010.

Coal

For more than 25 years, TOTAL has exported steam coal from its mines located in South Africa, primarily to Europe and Asia. Today, TOTAL owns and operates three mines. A fourth mine is under construction and several mining development projects are being reviewed. The Group also trades and markets steam coal through its subsidiaries Total Gas & Power Ltd, Total Energy Resources (Pacific Basin) and CDF Énergie (France).

TOTAL sold approximately 8.4 Mt of coal worldwide in 2008 (compared to 10 Mt in 2007 and 9.2 Mt in 2006) of which 4.0 Mt was South African steam coal (compared to 4.7 Mt in 2007). Approximately 50% of the Group’s South African coal production was sold to European utility companies and approximately 40% was sold in Asia.

The Group’s South African coal is exported through the port of Richard’s Bay in which TOTAL has a 5.7% interest. In 2008, the Group and its partner Mmakau Mining acquired an additional 1 Mt/y of harbor handling rights through the interests they hold in the fifth phase of the port’s development. On the South African domestic market, sales amounted to 0.5 Mt in 2008, primarily destined for the industrial and metallurgic sectors.

Total Coal South Africa (TCSA) is developing new mines. The Forzando South mine, with a planned final capacity of 1.2 Mt/y, entered into production in 2007 and the Tumelo mine in January 2009. In 2007, TCSA became the majority shareholder of the Eloff mine, with a 51% interest.

TOTAL is also active in coal trading through its wholly-owned subsidiary Total Energy Resources (TER) in Hong Kong and through a representative office established in Jakarta. Approximately 34% of the 8.4 Mt of coal traded in 2008 was sold in Asia.

DME (Di-Methyl Ether)

After tests were successfully conducted on DME direct synthesis between 2001 and 2006, TOTAL and eight Japanese partners inaugurated on September 3, 2008, a DME production plant located in Niigata (Honshu Island, Japan). With a capacity of 80 kt/y, this plant produces DME from imported methanol and promotes this new generation clean fuel to Japanese consumers.

Within the consortium led by Volvo, TOTAL has been participating since 2008 in a “bio-DME” European project. DME would be produced by gasifying black liquor, a production residue from paper pulp. It will then be transported to four cities in Sweden, including Stockholm, to supply a pilot fleet of 14 trucks constructed by Volvo. This project is cofinanced by the partners in the consortium, the EU Seventh Framework Program and the Swedish Energy Agency. This preliminary step precedes production on an industrial scale.


In 2008, the Group’s Chinese subsidiary in charge of marketing LPG, Shanghai Total China Merchants LPG Consulting Co., Ltd (TOTAL, 50%), pursued its test program on mixed LPG and DME products in a sample of seventy-five industrial and individual customers. These tests confirmed the positive results achieved in laboratories in 2007. Continuation of the tests is now

subject to regulations to be introduced by the Chinese authorities for these mixed products.

The ISO standardization process for DME, launched in 2007, continued in 2008 through an international working group established for this purpose.


Downstream

The Downstream segment comprises TOTAL’s Refining & Marketing and Trading & Shipping divisions.

Refining & Marketing

As of December 31, 2008, TOTAL’s worldwide refining capacity was 2,604 kb/d. The Group’s worldwide refined products sales were 3,658 kb/d (including trading activities), compared to 3,774 kb/d in 2007 and 3,682 kb/d in 2006. TOTAL is the largest refiner/marketer in Western Europe(1), and the largest marketer in Africa(2). As of December 31, 2008, TOTAL’s worldwide marketing network consisted of 16,425 retail stations (compared to 16,497 in 2007 and 16,534 in 2006), more than 50% of which are owned by the Group. In addition, TOTAL’s refineries allow the Group to produce a broad range of specialty products, such as lubricants, liquefied petroleum gas (LPG), jet fuel, special fluids, bitumen and petrochemical feedstock.

In refining, the Group continues to improve its position by focusing on three key areas: adapting its European refining system to market changes; modernizing its Port Arthur refinery (United States) with the construction of a deep-conversion unit; and pursuing the Jubail refinery project in Saudi Arabia.

Regarding its marketing activities, the Group intends to consolidate its position in Western Europe and to pursue targeted developments in Africa and the growing markets of the Asia-Pacific region, while also growing its worldwide specialty products activities.

Refining

As of December 31, 2008, TOTAL held interests in twenty-five refineries (including twelve that it operates), located in Europe, the United States, the French West Indies, Africa and China.

TOTAL’s refining capacity inWestern Europe was 2,281 kb/d in 2008, accounting for more than 85% of the Group’s overall refining capacity and making TOTAL the leading refiner in this region(1). The Group operates eleven refineries in Western Europe, and holds interests in the German refinery of Schwedt and in four Spanish refineries through its holding in CEPSA(3).

InFrance, TOTAL announced in February 2009 its intention to sell its minority interest (40%) in Société de la Raffinerie de Dunkerque (SRD), a company specialized in the production of bitumen and basic oils, subject to the satisfaction of certain conditions precedent and to the consultation of the SRD works council.

In theUnited States, TOTAL operates the Port Arthur refinery in Texas, with a capacity of 174 kb/d.

InAfrica, TOTAL holds interests in six refineries.

InChina, TOTAL has held since 1997 a 22.4% interest in the WEPEC refinery, located in Dalian, in partnership with Sinochem and PetroChina.

Over the period from 2009 to 2013, TOTAL plans to invest on average more than 1.3 B€ per year in refining, excluding major turnarounds.

Nearly 40% of this investment is designated for two major construction projects: a deep-conversion unit in the United States, and a new refinery in Saudi Arabia.


(1)Based on publicly available information, refining capacities.
(2)PFC Energy, September 2008, based on quantities sold.
(3)Group’s share in CEPSA: 48.83% as of December 31, 2008.

would offer for sale its Lindsey refinery in the United Kingdom. Due to the difficult market conditions and the lack of sufficiently attractive and competitive offers, the Group decided in early 2012 to maintain the refinery 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% stake 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)  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)For refineries not 100% owned by TOTAL, the capacity shown is TOTAL’s equity share of the site’s overall refining capacity.

At(b)TOTAL’s stake was 71.9% until September 30, 2010.
(c)TOTAL’s stake is 55%.
(d)TOTAL has equity stakes ranging from 12% to 50% in ten refineries (five in Africa, two in Italy, one in Germany, one in Martinique and one in China). TOTAL divested its Port Arthurstake in the Indeni refinery in Zambia in 2009. Since October 2010, theUnited States, amounts include the Group’s share in the Rome and Trecate refineries through its stake in TotalErg. TOTAL started the constructiondivested its stake in 2008 of a deep-conversion unit (or coker), a vacuum distillation unit, a desulphurization unit and other associated units as part of a modernization project. This project is designed to process more heavy and high-sulphur crudes and to increase production of lighter products,CEPSA (four refineries) in particular low-sulphur distillates. Start-up is expected in 2011.

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)  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  

In(a)Saudi Arabia,For refineries not 100% owned by TOTAL, and Saudi Arabian Oil Company (Saudi Aramco) confirmed in May 2008 the construction of a 400 kb/d refinery in Jubail. The heavy conversion process for this refinery is designed for the processing of heavier crudes (Arabian Heavy) and for the production of fuels and lighter products that meet strict specifications and are mainly intended for export.

As part of this project, a joint venture initially held by Saudi Aramco (62.5%) and TOTAL (37.5%) was created in September 2008. TOTAL and Saudi Aramco eventually plan to each retain a 37.5% interest with the remaining 25% expected to be listed on the Saudi stock exchange, subject to the approvalshown is TOTAL’s equity share of the relevant authorities.site’s overall production.

(b)Avgas, jet fuel and kerosene.

Utilization rate

The tables below set forth the utilization rate of the Group’s 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% 

The bidding process for
(a)Including equity share of refineries in which the constructionGroup has a stake.
(b)Crude/capacity and distillation at the beginning of the project was launched in July 2008. Construction is expected to start in the third quarter 2009 for start-up in 2013.year.

Marketing

TOTAL is one of the leading marketers in Western Europe.(1) The Group is also the largest marketer in Africa, with a market share of nearly 14%.(2)

TOTAL markets a wide range of specialty products produced from its refineries and other facilities. TOTAL is among the leading companies in the specialty products market, in particular for lubricants, LPG, jet fuel, special fluids, bitumen, heavy fuels and marine fuels, with products marketed in approximately 150 countries(3).

Europe

In Europe, TOTAL has a network of more than 9,400 service stations in France, Belgium, the Netherlands, Luxembourg and Germany, as well as in Italy through its share in TotalErg (49%).

TOTAL also operates a network of 615 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-seven European countries.

InWestern Europe, TOTAL continued to optimize its Marketing business in 2011.

InFrance, the network benefits from a wide number of service stations and a diverse selection of products (such as the Bonjour convenience stores and car washes). Nearly 2,000 TOTAL-branded service stations and 270 Elf-branded service stations are operated in France. TOTAL also markets fuels at nearly 1,800 Elan-branded service 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.

Nearly 25% of this investment is designated to adapt TOTAL’s European refineries to changes in the oil market: shortage of diesel fuel in Europe; stricter fuel specifications; and an increased portion of supply consisting of high-sulphur crudes.

In theUnited Kingdom, the Lindsey refinery started the construction in June 2007 of a hydrodesulphurization unit (HDS) and a steam methane reformer (SMR) to process high-sulphur crudes and to increase its low-sulphur diesel production. The HDS unit is expected to be commissioned in late 2009 and is designed to increase the portion of high-sulphur crude that the plant can process from 10% to nearly 70%.

InGermany, the construction of a new desulphurization unit at the Leuna refinery started in 2008 and is scheduled to be commissioned in the fourth quarter 2009. This unit is designed to supply the German market with low-sulphur heating oil.

InFrance, the Group announced in March 2009 an industrial plan to adapt its refining base, primarily by reconfiguring the Normandy refinery and rescaling certain corporate departments at its Paris headquarters. The Normandy refinery project will shift the production emphasis to diesel, as oil consumption diminishes and gasoline surpluses increase in France. An investment program of approximately 770 M€ is intended to upgrade and reconfigure the facility, reducing its refining capacity to 12 Mt/y from 16 Mt/y. At the same time, the distillate hydrocracker (DHC) commissioned in 2006, which enables diesel production, will be upsized. These investments will lift the annual average diesel output by 10% and reduce surplus gasoline output by 60%. Implementation of this project, which is scheduled to be spread over three years, is subject to prior consultation with employee representatives.

Lastly, nearly 35% of this investment is designated for modernizing refining sites, improving safety and energy efficiency, and reducing environmental impact.

CEPSA has also been pursuing a program to invest in the improvement of its refineries’ conversion capacity to respond to growing demand for medium distillates on the Spanish market. The construction of a 2.1 Mt/y hydrocracker unit, two additional distillation units (one atmospheric and one vacuum) and a desulphurization unit is underway at the Huelva refinery, with start-up scheduled for early 2010.

2008 was marked by a high level of maintenance activity, with six refineries having undergone complete or partial turnarounds, compared to ten(1) in 2007 and three in 2006. In 2009, six refineries operated by the Group are scheduled for major turnarounds, spread throughout the year.


 

 

(1)Including the Milford Haven refinery, in which the Group sold its entire 70% interest in December 2007.

Crude oil refining capacity

The table below sets forth TOTAL’s share of the daily crude oil refining capacity of its refineries.

As of December 31(a) (kb/d) 2008 2007 2006

Refineries operated by the Group

      

Normandy (France)

 339 331 331

Provence (France)

 158 158 158

Flandres (France)

 137 141 141

Donges (France)

 230 230 230

Feyzin (France)

 117 117 116

Grandpuits (France)

 101 101 99

Antwerp (Belgium)

 350 350 350

Leuna (Germany)

 230 227 227

Rome (Italy)(b)

 64 63 64

Immingham (UK)

 221 221 221

Milford Haven (UK)(c)

 —   —   74

Vlissingen (Netherlands)(d)

 81 81 81

Port Arthur, Texas (United States)

 174 174 174

Sub-total

 2,202 2,194 2,266

Other refineries in which the Group has an interest(e)

 402 404 434

Total

 2,604 2,598 2,700

(a)For refineries not 100% owned by TOTAL, the indicated capacity represents TOTAL’s share of the overall refining capacity of the refinery.
(b)TOTAL’s interest is 71.9%.
(c)TOTAL’s interest was 70% as of December 31, 2006. Interest sold in 2007.
(d)TOTAL’s interest is 55%.
(e)TOTAL has interests ranging from 16.7% to 50% in thirteen refineries (six in Africa, four in Spain, one in Germany, one in Martinique and one in China). TOTAL disposed of its 55.6% interest in the Luanda refinery in Angola in 2007.

Refined products(a)

The table below sets forth by product category TOTAL’s net share of refined quantities produced at the Group’s refineries.

(kb/d)  2008  2007  2006

Gasoline

  443  501  532

Avgas and jet fuel(b)

  208  208  203

Diesel and heating oils

  987  964  952

Heavy fuel oils

  257  254  266

Other products

  417  412  455

Total

  2,312  2,339  2,408

(a)Including TOTAL’s share in CEPSA.
(b)Avgas, jet fuel and kerosene.

Utilization rate(a)

The table below sets forth the utilization rate of the Group’s refineries.

    2008  2007  2006 

Crude

  88% 87% 88%

Crude and other feedstock

  91% 89% 91%

(a)Including TOTAL’s share in CEPSA.

Marketing

TOTAL is one of the leading marketers in Western Europe.(1) The Group is also the largest marketer in Africa, with a market share of 11%.(2)

TOTAL markets a wide range of specialty products, which it produces from its refineries and other facilities. TOTAL is among the leading companies in the specialty products market(3), in particular for lubricants, liquefied petroleum gas (LPG), jet fuel, special fluids and bitumen, with products marketed in approximately 150 countries(4).

Sales of refined products(a)

The table below sets forth by geographic area TOTAL’s volumes of refined petroleum products sold for the years indicated.

(kb/d)  2008  2007  2006 

France

  822  846  837 

Rest of Europe(a)

  1,301  1,432  1,438 

United States

  147  162(b) 160(b)

Africa

  279  286  274 

Rest of world

  171  167  153 

Total excluding Trading

  2,720  2,893(b) 2,862(b)

Trading (Balancing and Export Sales)

  938  881  820 

Total including Trading

  3,658  3,774(b) 3,682(b)

(a)Including TOTAL’s share in CEPSA.
(b)Amounts are different from those in TOTAL’s 2007 and 2006 Forms 20-F due to a change in the calculation method for sales of the Port Arthur refinery.

(1)Based on publicly available information, quantities sold. Portfolio: France, Benelux, United Kingdom, Germany, Italy, and, through CEPSA, Spain and Portugal.
(2)PFC Energy September 2008, based on quantities sold.
(3)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 autumn 2010 through the merger of Total Italia and ERG Petroli. TotalErg has become the third largest operator in the Italian market with a network market share of nearly 13%(1) and more than 3,350 service stations.

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 United Kingdom, the Channel Islands and the Isle of Man. This sale was closed in October 2011. TOTAL continues to operate in specialty products in the United Kingdom, particularly lubricants and aviation fuel.

InNorthern, Central and Eastern Europe, the Group is developing its positions primarily in the specialty products market. In 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 the Balkans through the development of its direct presence in these markets since 2008.

AS24, which is active in twenty-six European countries, continued to expand its network, exceeding the milestone of 600 service stations and opening new outlets in two new countries, Ukraine (2011) and Georgia (early 2012). The AS24 network is expected to continue to grow, mainly through expansion in the Mediterranean 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 14%.(2) Following the acquisition of marketing and logistics assets in Kenya and Uganda in 2009, the Group runs more than 3,500 service stations in more than forty countries and operates major networks in South Africa, Nigeria, Kenya and Morocco. As part of the optimization of its portfolio, the Group divested its subsidiary in Benin in late 2010.

TOTAL also has a large presence in Turkey and Lebanon, and is developing a network of large service stations in 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 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 160 service stations at 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 has become one of the leaders in the Vietnamese lubricants market due to the acquisitions of assets at year-end 2009.

Americas

InLatin America and the Caribbean, 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:

(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)Including TOTAL’s share in CEPSA (up to end of July 2011) and, as from October 1, 2010, in TotalErg.

(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.
(4)

Service stations

Including through national distributors.

Retail stations

The table below sets forth by geographic area the number of retail stations in TOTAL’s network.

The table below sets forth the number of service stations of the Group:

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  

 

As of December 31,  2008  2007  2006

France

  4,782(a) 4,992  5,220

Rest of Europe (excluding France and CEPSA)

  4,541  4,762  4,628

CEPSA(b)

  1,811  1,680  1,672

Africa

  3,500  3,549  3,562

Rest of world

  1,791  1,514  1,452

Total

  16,425  16,497  16,534

(a)Of which nearly 2,400 retail stations are under the TOTAL brand, nearly 300 retail stations are under the Elf brand and more than 1,800 retail stations are under the Elan brand.
(a)Total-, Elf- and Elan-branded service stations.
(b)Including all retail stations within the CEPSA network.

Europe

Biofuels

TOTAL is active in the biodiesel and biogasoline sectors. In 2011, TOTAL produced and blended 494 kt of ethanol(1) in gasoline at its European refineries(2) and several oil depots (compared to 464 kt in 2010 and 510 kt in 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 thus participating in French, European and international bioenergy development programs. As part of this, TOTAL is involved in two demonstration projects:

BioTfueL, which aims to develop technology to convert biomass into biodiesel; and

Futurol, an 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 lignocellulosic biomass.

Hydrogen and electric mobility

TOTAL is continuing its hydrogen fueling demonstrations as part of the Clean Energy Partnership in Germany. A new prototype station is being built in the center of Berlin and is scheduled to open in February 2012. TOTAL is also involved in the “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 of 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 Belgium. In France, two stations have been completed in the Paris area as part of the SAVE project, and six are being built in the Netherlands.

Trading & Shipping

InEurope, TOTAL has a network of 11,134 retail stations in France, Belgium, The Netherlands, Luxembourg, Germany, the United Kingdom, Italy, and, through its 48.83% interest in CEPSA, Spain and Portugal. TOTAL is among the leaders in Europe for fuel-payment cards, with approximately 3.4 million cards issued in more than twenty European countries.

InFrance, the TOTAL-branded network benefits from a wide number of retail stations and a diverse selection of products (such as theBonjour convenience stores and car washes). Elf-branded retail stations offer quality fuels at prices that are particularly competitive. As of December 31, 2008, nearly 2,400 TOTAL-branded retail stations and 300 Elf-branded retail stations were operating in France. TOTAL also markets fuels at more than 1,800 Elan-branded retail stations, generally located in rural areas.

TOTAL launched, in the fall of 2008, a universal Visa® card entitling customers to immediate discounts on fuels in all French TOTAL-branded retail stations. The Group intends to strengthen its leadership(1) in the marketing of fuels in France by increasing the attractiveness of its network to its individual customers.

In 2008, TOTAL continued its efforts to optimize its marketing activities inWestern Europe. In Portugal, TOTAL and CEPSA merged their oil marketing activities in 2008. The combined entity has a leading position on

the Portuguese oil market with a market share of approximately 11%(1), a network of 300 retail stations and a strengthened position in the specialty products market. In Spain, the Group sold its LPG marketing activities in August 2008. In France and Germany, TOTAL continued a program initiated in 2007 to adapt and restructure its marketing activities to optimize its organization and to reduce operating costs.

InCentral and Eastern Europe, the Group is developing its positions primarily through its specialty products. In 2008, TOTAL continued to expand its presence in the growing markets of Eastern Europe, in particular for lubricants. In September 2008, the Group finalized the acquisition of bitumen assets in Poland, strengthening its position in the rapidly growing market for bitumen in that country.

As of December 31, 2008, TOTAL had a network of more than 500 “AS24”-branded retail stations in twenty European countries specialized in the marketing of fuels to professional transporters. During the next few years, the AS24 network is expected to continue its growth and to expand to other countries in northern and southeastern Europe.

Africa & the Middle East

As of December 31, 2008, TOTAL is the leading marketer of petroleum products in the African continent, with a market share of 11%(2) and 3,500 retail stations in more than forty countries. The Group operates two major networks in South Africa and Nigeria. TOTAL also has a large presence in the Mediterranean Basin, principally in Turkey, Morocco and Tunisia. In the Middle East, the Group is primarily active in the specialty products market and is pursuing its growth strategy in the region, notably through the production and marketing of lubricants.

In 2008, the Group continued to strengthen its positions on the African continent. In November 2008, TOTAL entered into an agreement to acquire marketing and logistics assets in Kenya and Uganda. The transaction covers 165 retail stations, aviation product distribution as well as several logistics sites and a lubricant manufacturing plant. Subject to the approval of the relevant authorities, this agreement is expected to enable the Group to strengthen its position in Eastern Africa.

In August 2008, TOTAL disposed of its marketing activities in Rwanda, Burundi and Guinea-Bissau.


 

 

(1)Based on publicly available information, quantities sold.
(2)PFC Energy September 2008, based on quantities sold.

Asia-Pacific

As of December 31, 2008, TOTAL was present in nearly twenty countries in the Asia-Pacific region, primarily through its specialty products. The Group is also developing its position as a fuel distributor in the region, in particular in China, and operates two major networks, in Pakistan and the Philippines.

InChina, the Group operated approximately 100 retail stations as of December 31, 2008, pursuant to two joint venture agreements signed in 2005 by TOTAL and Sinochem to develop a network of 500 retail stations in the Beijing and Shanghai areas.

InSouth Korea, TOTAL increased its interest in its subsidiary Total ISU Oil Co. Ltd to 100% early in 2008 by acquiring the interests of Isu Chemical Co. Ltd and at the same time announced the creation of a joint venture (TOTAL, 50%) with a South Korean company, S-Oil. This transaction is expected to make TOTAL a leading marketer of lubricants in South Korea.(1)

InIndia, the Group is pursuing the development of its specialty products activities. In September 2008, a joint venture (TOTAL, 50%) was created for bitumen activities to supply the Indian road industry in special and emulsion bitumen. Marketing under this joint venture started in December 2008.

InVietnam, TOTAL acquired a company specialized in the marketing of LPG in December 2008. This transaction is expected to enable the Group to substantially strengthen its presence on the market.

Rest of world

InLatin America and theCaribbean, TOTAL is active in nearly twenty countries, primarily through its specialty products. In the Caribbean, the Group pursued the development of its marketing activities through the acquisition, in the second half 2008, of marketing and logistics assets in Puerto Rico, Jamaica and the Virgin Islands. This transaction covers approximately 200 retail stations, aviation product distribution and several terminals. The purchase of these assets is expected to strengthen TOTAL’s activities in the region.

InNorth America, TOTAL markets lubricants and, late in 2008, it expanded its presence in the United States by acquiring a company present in nearly twenty U.S. states.

The Group intends to accelerate the development of its specialty products activities inRussia and theUkraine, two regions with significant potential for growth. Through the development of its presence in these markets in 2008, the Group has primarily targeted the growth of its lubricant sales.

Biofuels and hydrogen

Biofuels

TOTAL is active in the biodiesel and biogasoline biofuel sectors. In 2008, TOTAL consolidated its position as a leading oil and gas company in the European biofuels market(1) by producing and incorporating 790 kt of ETBE(2) at ten refineries(3) (compared to 710 kt in 2007 and 500 kt in 2006) and incorporating 1,470 kt of VOME(4) at fourteen European refineries and several storage sites (compared to 880 kt in 2007 and 420 kt in 2006).

TOTAL, in partnership with the leading companies in this area, is developing second generation biofuels derived from biomass. The Group is also participating in French, European and international bioenergy development programs.

In this framework, TOTAL announced in September 2008 its participation in Futurol, a research and development project for cellulosic bioethanol, which intends to perfect and promote on an industrial scale a production process involving hydrolisis of lignocellulosic biomass.

Hydrogen

In 2008, TOTAL continued its research and testing programs for fuel cell and hydrogen fuel technologies. For several years, TOTAL has been developing cooperation agreements for automotive applications (with BMW in 2006, Renault in 2003 and Delphi in 2001) and stationary applications (Electrabel and Idatech in 2004). Under its partnership with BVG, the largest public transport company in Germany and a bus operator in Berlin, TOTAL participated in the creation of a Center of Excellence for Hydrogen in Berlin.

TOTAL is also participating in the hydrogen technology platform launched by the European Commission and is a founding member of the industrial group created in 2007 to participate in the European Joint Technology Initiative to promote the development of hydrogen technology.


(1)Based on publicly available information, quantities sold.
(2)ETBE: Ethyl-Tertio-Buthyl-Ether.
(3)Including the Algeciras and Huelva refineries (CEPSA).
(4)VOME: Vegetable-Oil-Methyl-Ester.

Trading & Shipping division:

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.

The Trading & Shipping division’s main focus is serving the Group. In addition, the division’s expertise allows it to extend its scope of 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.

 

The Trading & Shipping division:

sells and markets
(1)Contango is a term used to describe an energy market in which 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.

Although the Trading & Shipping division’s main focus is serving the Group, its know-how and expertise also allow this division to extend the scope of its activities beyond meeting the strict needsanticipated value of the Group.

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 Canada Ltd, Total Trading and Marketing Canada L.P. and Chartering & Shipping Services S.A.


Trading

TOTALspot price in the future is one ofhigher than the world’s major traders of crude oil and refined products on the basis of volumes traded.

current spot price. The table below sets forth selected information with respect to TOTAL’s worldwide sales and source of supply of crude oil for each of the last three years.

Supply and sales of crude oil

For the year ended December 31 (kb/d, except %)  2008  2007  2006

Supply of crude oil

         

Total supply

  3,839  4,194  4,112

Production sold(a)(b)

  1,365  1,502  1,473

Purchased from external suppliers

  2,474  2,692  2,639

Production by the Group as a percentage of total supply

  36%  36%  36%

Sales of crude oil

         

Total sales

  3,839  4,194  4,112

Sales to Downstream segment(c)

  1,995  2,042  2,074

Sales to external customers

  1,844  2,152  2,038

Sales to external customers as a percentage of total sales

  48%  51%  50%

(a)Including condensates and natural gas liquids.reverse situation is described as backwardation.
(b)Including TOTAL’s proportionate share of the production of joint ventures.

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 sources of supply of crude oil and sales of refined products for the Group’s Trading division for each of the last three years.

Trading of physical volumes of crude oil and refined products amounted to 4.4 Mb/d in 2011.

Trading division’s supply and sales of crude oil and sales of refined products(a)

(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)Including condensates.
(c)Excluding share of CEPSA.

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.

In 2011, the oil market tightened; as a result, the oil price rise accelerated and the structure of crude oil prices flipped from contango to backwardation(1).

        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)1st line: Average quotation on ICE Futures for first nearby month delivery.

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 and 31 to the Consolidated Financial Statements.


All of TOTAL’s trading activities are subject to strict internal controls and trading limits.

Throughout 2008, the Trading division maintained a level of activity similar to the levels attained in 2007 and 2006, trading physical volumes of crude oil and refined products amounting to an average of approximately 5 Mb/d.

In 2008, the principal market benchmarks stood at historically high levels of volatility:

          2008         2007         2006     min 2008  max 2008 

Brent ICE Futures — 1st Line(a)

 ($/b) 98.52 72.67 66.11 36.61 (Dec 24) 146.08 (Jul 03)

Gasoil ICE Futures — 1st Line(a)

 ($/t) 920.65 637.8 580.4 402 (Dec 26) 1,325.25 (Jul 11)

VLCC Ras Tanura Chiba — BITR(b)

 ($/t) 24.09 13.93 14.52 11.16 (Nov 28) 45.49 (Jan 02)

(a)

1st line: Quotation for first month nearby delivery ICE Futures.

(b)12th Line: Average quotation on ICE Futures for twelfth nearby month delivery.

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 aggravated by production 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 the embargo). 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 in 2011 (LPG, LNG, biofuels) rose (+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 the 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 (December 2011 year-on-year, crude -26 Mb and

products -36 Mb).

2011 also saw a widening of the price differential between WTI crude (confined to the central United States) and Brent crude (delivered in the North Sea and accessible internationally). While Brent was experiencing upward pressure due to the balance of crude oil on the international market, WTI was under downward pressure from a continuous rise in local 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 central United States.

Shipping

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 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 rate fluctuations.

In 2011, TOTAL’s Shipping division chartered approximately 3,000 voyages to transport approximately 110 Mt of crude oil and refined products. As of December 31, 2011, it employed a fleet of fifty vessels chartered under long-term or medium-term agreements (including eight LPG carriers), of which none is single-hulled. The fleet has an average age of approximately five 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. Data estimated from BITR market quotations. BITR: Baltic International Tanker Routes.

2011 was a particularly eventful and difficult period for oil shipping activities.

During the first half of 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.

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.

This situation severely damaged the fundamentals of the freight market for crude oil transport. Following the extremely cold weather at the beginning of 2011, which sustained rates for a time, there was a collapse in the

second quarter that left the market at a historic low. With regard to the product tanker market, the situation remains

poor worldwide, with transatlantic traffic to the United States particularly slow.

CHEMICALS

The 2011 Chemicals segment included the Base Chemicals (petrochemicals and fertilizers businesses) and Specialty Chemicals (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 2011, the Base Chemicals division’s sales were€12.7 billion, compared to€10.7 billion in 2010 and€8.7 billion in 2009.

Petrochemicals

BREAKDOWN OF TOTAL’S MAIN PRODUCTION CAPACITIES

(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)Including minority interests in Qatar and 50% of Samsung-Total Petrochemicals capacities.

Shipping(b)

The Shipping division arranges the transportation of crude oil

Ethylene, propylene and refined products necessary for the Group’s activities. The Shipping division provides the wide range of shipping services required by the Group to develop its activitiesbutadiene.
(c)Styrene and maintains a rigorous safety policy. 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-rate fluctuations.

In 2008, the Shipping division of the Group chartered 3,182 voyages to transport approximately 128 Mt of oil. As of December 31, 2008, the Group employed a fleet of sixty-two vessels chartered under long-term or medium-term agreements (including six LPG carriers). The fleet, consisting entirely of double-hulled vessels, has an average age of approximately five years.

While the beginning of the year was marked by relatively low freight-rate levels, the shrinkage in the freight market in 2008, particularly between the end of April and the beginning of August, led to historically high freight-rate levels.

On route TD3 (transportation of crude, Persian Gulf -Japan, VLCC), spot interest rates averaged WS209(1) between May and July (compared to an average of WS106 over the 2003-2007 period). Daily average income on TD3 from May to July exceeded $158,000/d (compared to approximately $61,000/d over the 2003- 2007 period). Consistent with past experience, freightpolystyrene.

The petrochemicals business includes base petrochemicals (olefins and aromatics) and their polymer derivatives (polyolefins and styrenics).

InEurope, the main petrochemical sites are located in Belgium, in Antwerp (steam crackers, polyethylene) and Feluy (polypropylene, polystyrene), and in France, in Carling (steam cracker, polyethylene, polystyrene), Feyzin (steam cracker), Gonfreville (steam crackers, styrene, polyolefins, polystyrene) and Lavéra (steam cracker, polypropylene).

In theUnited States, the main petrochemical sites are located in Carville, Louisiana (styrene, polystyrene), and in

Texas, in Bayport (polyethylene), La Porte (polypropylene) and Port Arthur (steam cracker, butadiene).

InAsia, TOTAL owns, in partnership with Samsung, a 50% interest in the petrochemical site located in Daesan, South Korea (steam cracker, styrene, paraxylene, polyolefins). The Group is also active through its polystyrene plants located in Singapore and Foshan (China).

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 integrated within refining operations.

rates for other ship sizes predominantly followed the trend recorded by VLCCs. Transport of petroleum products also benefited, to a lesser extent, from the general increase of freight rates.

These historically high freight-rate levels can be explained by several factors. Worldwide tanker fleet growth was moderate, notably with a reduction in size of the VLCC fleet during the first three quarters of the year (with zero overall growth in 2008) and a stagnation of the Suezmax fleet over the same period (weak growth in 2008). This is particularly due to the removal of single-hulled tankers from the fleet for conversion into dry bulks. The use of several VLCCs to store Iranian crude between June and August 2008 also limited the effective tonnage (40 Mb at the beginning of June,i.e., the equivalent of nearly twenty VLCCs).

In addition, demand for transport in 2008 remained strong, in particular during the summer months due to Saudi Arabia’s increased production as from July, which led to a growth in demand for crude transport, especially on long-haul VLCC flows from the Persian Gulf.

From the end of August 2008, market trends reversed. The decrease in global oil demand due to the global economic crisis led the OPEC countries to cut production, resulting in a decrease in crude transport demand. As offered tonnage levels increased and demand remained stable, the surplus in tonnage increased, leading to a drop in spot freight rates.


Chemicals

 

 

The Chemicals segment includes the Base Chemicals and Specialty Chemicals divisions:

Base Chemicals encompasses the Group’s petrochemicals and fertilizers activities; and

Specialty Chemicals encompasses the Group’s rubber processing, resins, adhesives and electroplating activities.

TOTAL is one of the world’s largest integrated chemical producers.(2)

On May 12, 2006, TOTAL’s shareholders approved the spin-off of Arkema, which, since October 1, 2004, included vinyl products, industrial intermediates and performance products. Arkema has been listed on Euronext Paris since May 18, 2006.

The Chemicals segment improved its safety performance in 2008 by focusing on on-the-job safety, safety management systems and major risk prevention.


(1)

WS (Worldscale rate): "Worldscale" refers to the "New Worldwide Tanker Nominal Freight Scale," an index intended to permit the comparison of freight rates for various size tanker routes. A particular route’s "Worldscale Rate" represents a voyage charter rate for a hypothetical 75,000 dwt tanker on such route, with Worldscale 100 representing the break-even cost for such a tanker on that route. Worldscale Rates are calculated in USD per ton of crude oil and are updated annually.

(2)(1)Based on publicly available information, consolidated sales.

Base Chemicals

The Base Chemicals division includes TOTAL’s Petrochemicals and Fertilizers activities.

2008 sales amounted to 13.18 B€, compared to 12.56 B€ in 2007 and 12.01 B€ in 2006. Adjusted net operating income decreased by 25% in 2008 compared to 2007, after an 11% decrease in 2007 compared to 2006. This change primarily reflects the fall in petrochemicals margins in the first half 2008 due to the significant increase in the price of naphtha and the

decrease in sales volume of polymers stemming from the global economic slowdown. In petrochemicals, the Group’s operations in Qatar helped to offset the decrease in results in the mature markets of Europe and the United States. The Fertilizers activity benefited from a favorable environment and an improvement of its industrial operations, which contributed to the significant recovery of its results in 2008.


Petrochemicals

TOTAL’S PRODUCTION CAPACITIES BY

MAIN PRODUCT GROUPS AND REGIONS

    2008  2007  2006
(kt/y)  Europe  North
America		  Asia and
Middle
East(c)		  Worldwide  Worldwide  Worldwide

Olefins(a)

  5,085  1,195  1,005  7,285  7,175  7,035

Aromatics

  2,665  940  755  4,360  4,335  4,255

Polyethylene

  1,315  440  280  2,035  2,035  2,035

Polypropylene

  1,275  1,180  295  2,750  2,575  2,420

Styrenics(b)

  1,240  1,350  630  3,220  3,160  3,105

(a)Ethylene, propylene and butadiene.
(b)Styrene, polystyrene and elastomers (activity discontinued at the end of 2006).
(c)Including minority interests in Qatar and 50% of Samsung-Total Petrochemicals capacities in Daesan (South Korea).

The Petrochemicals activities of Total Petrochemicals include base petrochemicals (olefins and aromatics) and their derivatives (polyethylene, polypropylene and styrenics).

TOTAL’s main petrochemicals sites are located in Belgium (Antwerp, Feluy), France (Gonfreville, Carling, Lavéra, Feyzin), the United States (Port Arthur, La Porte and Bayport in Texas and Carville in Louisiana), Singapore and China (Foshan). Most of these sites are either adjacent to or connected by pipelines to Group refineries. As a result, most of TOTAL’s petrochemicals activities are closely integrated within the Group’s refining operations.

TOTAL owns a 50% interest in the Daesan petrochemicals site in South Korea, in partnership with Samsung. This integrated site is located 400 km off the Chinese coast.

TOTAL also holds a 20% interest in a site with a steam cracker and two polyethylene units in Mesaieed, Qatar.

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 an increasingly competitive environment, the Group launched two reorganization plans mainly for the Carling (eastern France) and Gonfreville (northwestern France) sites:

 

TOTAL has continued to strengthen its leadership positions in the industry by focusing on the following strategic areas:

In mature markets, TOTAL is improving the competitiveness of its sites notably through continued improvement of energy efficiency and industrial safety at its facilities. The reorganization plans of 2006 (approved) and 2009 (presented) for the Carling and Gonfreville sites in France are part of this strategy.

–

The first plan, callslaunched in 2006, called for the closingclosure of aone of the steam crackercrackers and the styrene plant at Carling and the construction of a new world-class(1)(1) styrene plant at Gonfreville to replace the existing one on this site. Implementation of thisplant closed in late 2008. The reorganization plan is expected to bewas completed in the first halfquarter of 2009.

–

In addition,The second plan, launched in 2009, is a consolidation project to improve the Group presented in March 2009sites’ competitiveness. This project includes a second plan to upgrade itsthe Group’s most efficient units by investing approximately€230 million over three years to increase energy efficiency and consolidate its petrochemicals competitiveness in France. As part of the project, approximately 230 M€€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 structurally loss-making 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. This reorganization plan also impacted the support services at both sites and the central services at Total Petrochemicals France.


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.

InAsia, the Samsung-Total Petrochemicals Co. Ltd joint venture (TOTAL, 50%) completed in mid-2011 the first debottlenecking phase of the units at the Daesan site in South Korea, with the aim of bringing them to full capacity. This first phase included increasing the capacity 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 involves 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 2014: a new 240 kt/y EVA(2) unit and a new aromatic unit with a capacity of 1.5 Mt/y of paraxylene and benzene, the feedstock of which will be supplied by a condensate splitter that will also produce jet fuel and diesel. As a result, the site’s paraxylene production capacity will be increased to 1.8 Mt/y.

In theMiddle East, the 700 kt/y paraxylene unit at the Jubail refinery in Saudi Arabia is under construction. This world-class unit is mainly intended to supply the Asian market. Start-up is scheduled for 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.

will be invested to bring to the most efficient level the energy efficiency and competitive strength of the steamcracker and high-density polyethylene (HDPE) unit in Gonfreville and to consolidate polystyrene production at the Carling facility. It will also lead to the closure of structurally loss-making units: a low-density polyethylene line in Carling in eastern France and a low-density polyethylene line and a polystyrene line in Gonfreville in northwestern France. This reorganization plan is also intended to improve the efficiency of support services and central services.

Furthermore, following the sole customer’s termination of the supply contract for the secondary butyl alcohol produced at the Notre-Dame-de-Gravenchon facility in northwestern France, this dedicated facility will have to be closed. Implementation of this project is subject to prior consultation with employee representatives.

Finally, debottlenecking operations conducted in 2008 at the Feluy (Belgium), La Porte and Port Arthur (Texas, United States) sites are expected to strengthen the competitiveness of these sites.

•

In Asia, the principal growth area for demand for petrochemicals, Samsung-Total Petrochemicals Co. Ltd completed in 2008 the first modernization phase of the Daesan site in South Korea. This major development increased the site’s initial production capacity by nearly one-third by expanding the steam cracking and styrene units, by building a new polypropylene line in 2007 and by starting up a new metathesis(1) plant in 2008. The project was completed on time and on budget.

•

In May 2008, the project to build a paraxylene plant in Saudi Arabia was confirmed by both partners, TOTAL and Saudi Aramco. This project, carried out in cooperation with the Group’s Refining & Marketing division, is expected to lead to the construction of a world-class(2) paraxylene plant to supply the Asian market. Start-up of this project is scheduled for 2013.

TOTAL continues to develop sites in countries with favorable access to raw materials.

In Qatar, where the Group has been present since 1974 through its 20% interest in Qapco, TOTAL’s 49% affiliate Qatofin is building an ethane-based steam cracker at Ras Laffan, with a production capacity of 1.3 Mt, and a new world-class(2) linear low-density polyethylene plant in Mesaieed.

These two units are scheduled to come onstream in the second half 2009. In addition, Qapco’s existing

steam cracker in Mesaieed was debottlenecked and its production capacity brought to 720 kt/y in August 2007. Qapco expects to build a new low-density polyethylene unit whose commissioning is scheduled in 2011.

Pursuant to the contract signed in July 2007, TOTAL is continuing its partnership with Sonatrach, the Algerian national oil company, to build a petrochemicals site in Arzew (Algeria). The project includes an ethane-based steam cracker with a production capacity of 1.1 Mt, two polyethylene units and a monoethylene glycol production unit. This world-class(2) project, with favorable access to one of the last particularly competitive sources of relevant raw materials, is ideally located to supply Europe, the Americas and Asia.

In addition, TOTAL inaugurated in October 2008 a pilot MTO plant (Methanol to Olefins) at its Feluy site (Belgium). This research project, one of the Group’s most important research projects, is intended to assess, on a semi-industrial scale, the technical and economical feasibility of producing olefins from methanol derived from natural gas, as well as from coal and biomass, and to consider new methods to produce polyolefins.

On all of TOTAL’s petrochemicals sites, the progress realized in 2008 with respect to industrial security and environmental protection was in-line with the Group’s annual objectives.

Base petrochemicals

Base petrochemicals include olefins and aromatics produced by steam cracking petroleum cuts, mainly naphtha, as well as propylene and aromatics manufactured in the Group’s refineries. The economic environment for these activities is strongly influenced by supply and demand and the evolution of the price of naphtha, the principal raw material used.

2008 was marked by highly volatile commodity prices combined with a decrease of demand due to the global economic slowdown.

Olefins production decreased by 2% in 2008 compared to 2007, after a 2% increase in 2007 compared to 2006.

Polyethylene

Polyethylene is a plastic produced by the polymerization of ethylene manufactured in 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 by competition from expanding production in the Middle East, which takes advantage of favorable access to the raw material, ethane, to produce ethylene.


(1)Conversion of ethylene and butene into propylene.Ethylene Vinyl Acetate.
(2)Facilities ranking among the first quartile for production capacities based on publicly available information.

addition, construction of a 300 kt/y low-density polyethylene line has started at Qapco, in which TOTAL holds a 20% interest, with start-up scheduled for the second quarter of 2012.

2008 was marked by the global economic slowdown and strong decline in mature regions (Europe and the United States). TOTAL’s sales volume dropped by 9% in 2008 compared to 2007 and margins shrank. This pressure on margins is expected to persist during the upcoming years due to competition from new plants in the Middle East and Asia. In this context, TOTAL intends to focus on lowering the break-even points in its plants and strengthening its efforts to better differentiate its range of products.

Polypropylene

Polypropylene is a plastic produced by the polymerization of propylene manufactured in the Group’s steam crackers and refineries. It is primarily intended for the automotive, packaging, carpet, household, appliances, fibers and sanitary goods markets. Margins are mainly influenced by the level of demand and the availability and price of propylene.

2008 was marked by a decline of the polypropylene market, notably in Europe and in the United States, with TOTAL’s sales volume having decreased by 4% compared to 2007. Taking into account increased competition in the years to come from the start-up of new plants in the Middle East, TOTAL benefits from plants whose industrial performance, both in Europe and the United States, places the Group among the industry’s leaders. In this regard, TOTAL successfully achieved capacity increases of 60 kt/y in Feluy (Belgium) and 110 kt/y in La Porte (Texas, United States) in 2008.

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 packaging, domestic appliances, electronics and audio-video. Margins are strongly influenced by the level of polystyrene demand and the price of benzene, which is polystyrene’s principal raw material.

After a slight rise in world demand in 2007, the polystyrene market decreased in 2008, marked by a sharp decline of demand in mature zones and a net slowdown of growth in Asia, notably in China. After two years of slight increases, TOTAL’s polystyrene sales volume decreased by 7% in 2008 compared to 2007.

InChina, TOTAL and China Power Investment signed in November 2010 an agreement to study a project to build a coal-to-olefins plant and a polyolefins plant. TOTAL will bring to this partnership its expertise in the methanol-to-olefins (MTO) and olefin cracking process (OCP) technologies tested extensively at its plant in Feluy, Belgium.

Base petrochemicals

Base petrochemicals includes olefins and aromatics (monomers) produced by the steam cracking of petroleum cuts, 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.

The market was buoyant in the first half of 2011, followed by a significant slowing in volumes and falling margins, mainly in Europe and the United States, in the second half. Over 2011 as a whole, TOTAL’s production volumes remained stable.

TOTAL is expanding its positions in Asia and the Middle East with the start-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.

Polyolefins

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 resulting from the polymerization of ethylene produced 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.

2011 was marked by a slowdown in growth in demand in all geographical areas and by falling margins, more particularly in the second half. Europe was most affected by this deterioration in the market environment.

The Group’s sales volumes increased by 2% in 2011.

Polypropylene: Polypropylene is a plastic resulting from the polymerization of propylene produced 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.

As with polyethylene, 2011 saw a slowdown in growth in worldwide demand and falling margins in the second half of the year.

TOTAL’s sales volumes decreased by 2.5% compared to 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 styrene’s principal raw material.

The worldwide styrenics market increased by approximately 2% in 2011, driven by Asia, while the markets in 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.

TOTAL’s polystyrene sales volumes increased by 4% in 2011.

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 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.

2008 was marked by the significant recovery of GPN’s results. GPN’s sales increased by 47% in 2008 compared to 2007, after a 20% rise in 2007. The rise in global demand for cereals was reflected in a growth of nearly 5% of fertilizer demand in Europe compared to 2007. Improved production of the ammonia plants at Grandpuits and Rouen (France) enabled GPN to take advantage of this favorable environment.

In 2006, the Fertilizers activity launched a major restructuring plan to restore its profitability on a long-term basis:

GPN stopped its production in France of complex fertilizers, made from nitrogen, phosphorus and potassium products, due to the declining market for these products, and closed its plants in Bordeaux, Basse Indre, Rouen and Granville. In addition, TOTAL sold its Dutch affiliate, Zuid Chemie, to Engrais Rosier, in which the Group holds a 57% share, to create a more competitive player in the Benelux market.

 

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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 reduced production at the downstream plants (nitric acid, urea and ammonium nitrate). These incidents adversely affected the results of GPN, which could not take advantage of favorable global market conditions.

GPN’s plans were strengthened through two major investments: the construction 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 at 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 stake (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 have production capacity greater than the European average.

The Fertilizers activity’s core business, the production of nitrogen fertilizers, was strengthened through a major investment in the construction of two competitive nitric acid plants in Rouen and a urea plant in Grandpuits. Start-up of these plants is expected in the first half 2009. This additional urea production is expected to position GPN on the growing markets for DENOX products for industrial applications and Adblue for transportation applications. These products contribute to reducing nitrogen oxide emissions.(1)

In France, the Oissel site and three obsolete nitric acid units in Rouen and Mazingarbe are expected to shut down during 2009.

This plan is expected to improve the competitiveness of GPN by regrouping its operations at three sites, two of which feature a production capacity greater than the European average, as market perspectives remain satisfactory in the medium term.


Specialty Chemicals

TOTAL’s Specialty Chemicals division includes elastomer processing (Hutchinson), adhesives (Bostik) and electroplating chemistry (Atotech). It serves the automotive, construction, electronics, aerospace and convenience goods markets, for which marketing, innovation and customer service are key drivers. TOTAL markets specialty products in more than sixty countries and intends to develop by combining organic growth and targeted acquisitions. This development is focused on high-growth markets and the marketing of innovative products with high added value that meet the Group’s sustainable development approach.

The Hutchinson consumer goods business (Mapa® and Spontex®) was divested in spring 2010. Sales for the divested lines of business were€530 million in 2009.

The Cray Valley coating resins and Sartomer photocure resins businesses were divested in July 2011. Sales for the divested lines of business were€860 million in 2010. The structural and hydrocarbon resins business lines were kept and have been incorporated into the Petrochemicals division.

Specialty Chemicals enjoyed a favorable climate in the first three quarters of 2011 due to the resilience of the European and North American markets and continued growth in the emerging countries. The situation deteriorated in the fourth quarter. In this context and on a like-for-like basis (excluding Mapa Spontex and Resins), 2011 sales were€5.3 billion, a 9% increase compared to 2010.

Elastomer processing

Hutchinson manufactures and markets products derived from elastomer 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 seals, anti-vibration, sound and thermal 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€2.99 billion in 2011, up 10% compared to 2010. Sales for the automotive business increased 11% due to stable sales on the European and North American markets and increased sales on the Latin American and Chinese markets. On the industrial markets, sales increased at a lower rate because of the decline in the business planes, helicopters and defense markets, while sales on other industrial markets (e.g., civil aviation, railway, and offshore) saw similar rises to the automotive business.

To strengthen its position in the aerospace industry, in late 2008 Hutchinson acquired Strativer, a French company specialized in the growing composite materials 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.

 

 

TOTAL’s Specialty Chemicals division includes rubber processing (Hutchinson), resins (Cray Valley, Sartomer and Cook Composites & Polymers), adhesives (Bostik)

and electroplating (Atotech). The division serves consumer and industrial markets for which customer-oriented marketing and service as well as innovation are


(1)Nitrogen oxide’s
(1)Nitrogen oxide emissions are noxious to the environment and subject to regulation.

key drivers. The Group markets specialty products in more than fifty-five countries. Its strategy is to pursue its international expansion by combining internal growth and targeted acquisitions while concentrating
(2)Based on growing markets and focusing on the distribution of new products with high added value.

In 2008, Specialty Chemicals faced a difficult environment due to the economic slowdown in the United States and Europe. In this adverse environment, Specialty Chemicals’ sales decreased by 4% compared to 2007. Adjusted net operating income decreased by 18% compared to 2007.

Rubber processingpublicly available information, consolidated sales.

Hutchinson manufactures and markets products derived from rubber processing that are principally intended for the automotive, aerospace and defense industries and consumer markets.

Hutchinson continues 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 Casa Branca site (Brazil) opened in 2011.

Adhesives

Bostik is one of the world leaders in the adhesive sector(1)and has significant positions on the industrial, hygiene and construction markets, complemented by both consumer and professional distribution 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 2011, sales were€1.43 billion, up 3% compared to 2010.

Bostik continues to strengthen its technological position in the construction and industrial sectors, 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 start-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 United States, Bostik acquired StarQuartz in 2011, increasing its range of construction adhesives.

Finally, Bostik continued to rationalize its industrial base with the closure of the Ibos site in France, which came into effect at year-end 2011.

Electroplating

Atotech is the second largest company in the electroplating sector based on worldwide sales(1). It is active on the markets for electronics (printed circuits, semiconductors) and general metal finishing (automotive, construction, furnishing).

Atotech has sixteen production sites worldwide, including seven in Asia, six in Europe, two in North America and one in South America.

Atotech’s sales were€0.89 billion in 2011, up 14% compared to 2010 due to favorable conditions on all of its markets and a significant increase in equipment sales on the electronics market.

In order to strengthen its position on the electronics market, in 2011 Atotech started up a new production unit aimed at the semiconductors market in 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 almost 60% of its global sales.

OTHER MATTERS

 

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In the industrial market (automotive, aerospace, defense and transports), Hutchinson, among the industry’s leaders(1), intends to provide its customers with innovative solutions in the domains of fluid transfer, water and airtightness, transmission, mobility and vibration, sound and thermal insulation.

Globally, Hutchinson’s 2008 sales remained at a level similar to 2007 despite an uneven environment for its various activities. Automotive’s sales decreased by 6% compared to 2007 in an increasingly challenging environment, both in North America and in Europe, due to the difficulties faced by the automotive industry. In the other industrial markets, sales increased by more than 15% in 2008 compared to 2007 due to strong demand from the defense industry in the United States and from the aerospace and railway industries in Europe. To strengthen its position in the aerospace industry, Hutchinson acquired late in 2008 a company specialized in the expanding carbon fiber industry.

Throughout 2008, Hutchinson continued to develop in expanding markets, primarily Eastern Europe, South America and China, relying notably on the sites launched in 2006 in Romania (Brasov), Poland (Lodz) and China (Suzhou). To further this strategic objective, Hutchinson is expected to open a new site in Tunisia in 2009.

 

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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 operations are conducted in various countries and are therefore subject to a broad range of regulations. These cover virtually all aspects of exploration and production operations,

The consumer market is essentially oriented towards two ranges of products: baby care (Nuk® and Tigex®) and household specialties (Mapa® and

Spontex®). These activities depend highly on the level of household consumption. Despite the adverse effects of the economic slowdown that began mid-2008, the baby care sector and the household specialties sector continued to grow in 2008. The purchase of Gerber®’s baby care products in 2008 is expected to consolidate Hutchinson’s leading position(1) in this activity by strengthening its presence in the Western Hemisphere, notably in the United States, Canada and Brazil.

including 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 contracts.

Resins

TOTAL produces and markets resins for adhesives, inks, paints, coatings and structural materials through three subsidiaries: Cray Valley, Sartomer, and Cook Composites & Polymers.

Since the middle of 2007, this sector was affected by the slowdown of the U.S. economy. This trend continued in 2008. The decrease in volumes extended to Europe from the middle of 2008. Sales decreased by 9% in 2008 compared to 2007, after a 4% decrease in 2007.

In 2008, Cray Valley continued to streamline its European production.

Cook Composites & Polymers, through its affiliate Composite One, strengthened its composite materials distribution activities in the United States.

In the first quarter 2008, Sartomer started its new plant in Nansha, southern China, to pursue its development in growing markets.

Adhesives

Bostik is one of the world leaders in its sector, based on sales(2), with leading positions in the industrial, hygiene, construction and consumer and professional distribution markets.

In 2008, sales decreased by 6% compared to 2007 but remained relatively stable (-1%) at constant exchange rates.

These results in an adverse economy confirm Bostik’s strategy of strengthening its position in the industrial market, which has been less affected than the construction industry, and continuing its development in growing markets, especially in the Asia-Pacific region.

As a result, new production units were commissioned in China (Zhuhai) and Australia (Sydney).


 

 

(1)Based on publicly available information, consolidated sales.
(2)Based on publicly available information.

Furthermore, Bostik is actively pursuing its program for innovation and is focusing notably on new products and applications contributing to sustainable development.

Electroplating

Atotech, which encompasses TOTAL’s electroplating activities, is the second largest company in this sector, based on worldwide sales(1). It is active in both the electronics and general metal finishing markets.

The electroplating activities faced a slowdown at the end of 2008 that affected the general metal finishing market,

influenced by the difficulties faced by the automotive industry and the electronics industry. Sales decreased by 4% in 2008 compared to 2007.

During this period of economic slowdown, Atotech intends to pursue a full-service strategy for its customers in terms of equipment, chemical products and global geographical coverage through its technical centers. Major research will continue, notably to bring new solutions that meet the strictest environmental requirements. Finally, Atotech intends to continue its development in Asia, which represents more than 50% of its global sales.


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 activities are conducted in many different countries and are therefore subject to an extremely broad range of regulations. These cover virtually all aspects of exploration and production activities, 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.

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 other contractual structures still exist, TOTAL’s license portfolio is comprised mainly of concession agreements. In all countries, 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 “contracts for risk services” which are similar to production sharing contracts, with the main difference being that the repayment of expenses and the compensation for services are established on a monetary basis. Current contracts for risk services are backed by a compensation agreement (buyback), which allows TOTAL to receive part of the production equal to the cash value of its expenses and compensation.

Hydrocarbon exploration and production activities are subject to public authorizations (permits), which can be


 

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 models, TOTAL’s license portfolio is comprised mainly of concession agreements.

In 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.

Oil and gas exploration and production activities are subject to authorization granted by public authorities (licenses), which 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, of the area covered by the license at the end of the exploration period.

TOTAL pays 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 sales activities may be subject to a number of other taxes, fees and withholdings, including special petroleum taxes and fees. The taxes imposed on oil and gas production and sales 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 that, in certain cases, can reduce or challenge the protections offered by this legal framework.

Industrial and environmental considerations

TOTAL’s operations involve certain industrial and environmental risks which are inherent in handling, processing and use of products that are flammable, explosive, polluting or toxic.

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 those of explosion, fire, leakage of toxic products, and pollution. 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 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 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 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 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 EU:

 

(1)

The Industrial Emissions Directive (“IED”) entered into force on January 6, 2011, and must be transposed

Based on publicly available information.

different for eachinto national legislation by EU Member States by January 7, 2013. This Directive replaced a number of these activities. These permits are granted for limited periods of time and include an obligation to return a large portion, in case of failureexisting industrial emission directives, including the entire portion, of the permit area at the end of the exploration period.

TOTAL is required to pay income tax on income generated from its production and sales activities under its concessions or licenses. In addition, depending on the country, TOTAL’s production and sale activities may be subject to a range of other taxes, fees and withholdings, including special petroleum taxes and fees. The taxes imposed on oil and gas production and sale activities may be substantially higher than those imposed on other 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 which in certain cases can diminish or challenge the protections offered by this legal framework.

Industrial and environmental considerations

TOTAL’s activities involve certain industrial and environmental risks which are inherent in the production of products that are flammable, explosive or toxic. Its activities are therefore subject to government regulations concerning environmental protection and industrial safety in most countries. More specifically, in

Europe, TOTAL operates industrial sites that meet the criteria of the European Union Seveso II directive for classification as high-risk sites. Other sites operated by TOTAL in other parts of the world involve similar risks.

The broad scope of TOTAL’s activities, which include drilling, oil and gas production, on-site processing, transportation, refining, petrochemicals activities, storage and distribution of petroleum products, production of base chemical and specialty products, involve a wide range of operational risks. Among these risks are those of explosion, fire or leakage of toxic products. In the transportation area, the type of risks 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 (population density, environmental considerations).

Most of these activities involve environmental risks related to emissions into the air, water or soil and the creation of waste, and also require environmental site remediation and closure and decommissioning after production is discontinued.

Certain branches or activities face specific risks. In oil and gas exploration and production, there are risks

related to the physical characteristics of an oil or gas field. These include eruptions of crude oil or of natural gas, discovery of hydrocarbon pockets with abnormal pressure, crumbling of well openings, leaks generating toxic risks and risks of fire or explosion. All these events could possibly damage or even destroy crude oil or natural gas wells as well as related equipment and other property, cause injury or even death, lead to an interruption of activity or cause environmental damage. In addition, since exploration and production activities may take place on sites that are ecologically sensitive (tropical forest, marine environment, etc.), each site requires a specific approach to avoid or minimize the impact on the related ecosystem, biodiversity and human health.

TOTAL’s activities in the Chemicals segment and the Refining & Marketing division may also have health, safety and environmental risks related to the overall life cycle of the products manufactured. These risks can arise from the intrinsic characteristics of the products involved, which may, for example, be flammable, toxic, or result in long-term environmental impacts such as greenhouse gas emissions. Risks of facility contamination and off-site impacts may also arise from emissions and discharges resulting from processing or refining, and from recycling or disposing of materials and wastes at the end of their useful life.

Health, safety and environment regulations

TOTAL is subject in general to extensive and increasingly strict environmental regulation in the European Union. Significant directives which apply to its operations and products, particularly refining and marketing, but also its chemicals and, to a lesser extent, its upstream business, are:

The directive for a system of Integrated Pollution Prevention and Control (IPPC), a cost/benefit framework used to comprehensively assessDirective (2008/1/EC — “IPPC”) and the environmental quality standards, prior environmental impacts, and potential additional emissions limits on, large industrial plants, including its refineries and chemical sites.

Air Quality Framework Directive and related directives on ambient air quality assessment and management, which, among other things, limit emissions for sulfur dioxide, oxides of nitrogen, particulate matter, lead, carbon monoxide, benzene and ozone.

The Sulfur Content Directive, under which sulfur in diesel fuel has been limited to 0.2% since July 2000, and 0.1% as of January 2008. Since January 2003, sulfur in heavy fuel oil has been limited to 1%, with certain exceptions for combustion plants provided that local air quality standards are met.

The Large Combustion Plant Directive a directive which limits certain emissions from large combustion plants, including sulfur dioxide, nitrogen oxides and particulates; this directive became effective in 2008.(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


Automobile emission directives which control and limit exhaust emissions from cars and other motor vehicles. Under these directives, emission controls will continue to become more stringent over time. Since 2005, maximum sulfur levels for gasoline and diesel fuels have been 50 ppm and, beginning in 2009, a maximum sulfur content of 10 ppm will be mandatory throughout the EU.

The directive, adopted in September 2003, implementing the Kyoto Protocol within the European Union by establishing a system for greenhouse gas emissions quotas. This system, which entered into effect in January 2005, requires the Member States of the European Union to prepare quotas for industrial activities, in particular the energy sector, and to deliver carbon dioxide emissions permits based on these quotas.

The Major Hazards Directive, which requires emergency planning, public disclosure of emergency plans, assessment of hazards, and effective emergency management systems.

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. This directive is expected to completely enter into force and replace the Framework Directive and certain other directives by 2010.

Maritime oil spill directives, a number of which were passed in the wake of the Erika spill. Recent regulations require that tankers have double hulls and mandate improvements to navigation practices in the English Channel.

Numerous water 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 in 2003, a comprehensive framework water directive has begun progressively replacing the 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 regulating the classification, labeling and packaging of chemical substances and their preparation, as well as restrictingrestrict and banningban the use of certain chemical substances and products.

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 Harmonized System of Classification and Labelling 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 regulation 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 period 2010-2018. 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 will 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 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 with the Ordinance of December 17, 2010.

A number of Maritime Safety Directives were passed in the 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:

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A 2003 Directive implementing the Kyoto Protocol within the EU 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 for specific sectors, in particular the energy intensive installations that have to surrender quotas with 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 is established, TOTAL’s industrial facilities may incur capital and operating costs to comply with such legislation including the partial acquisition of emissions allowances.

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The first period of the Kyoto Protocol is reaching an end in 2012. 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 Durban conference of 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 signed by the negotiating countries as well as by the United States together with China, India and certain other developing nations.

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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, to improve energy efficiency by 20% and to increase renewable energy usage 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 European Chemical Agencylong-term target of reducing domestic emissions by 80 to 95% by mid-century. The sectors most responsible for emissions in the

Copenhagen are still in the process of implementing a new system for Registration, Evaluation and Authorization of Chemicals (REACH) which replaces or complements the existing rules in this area. REACH was adopted in June 2006 and will require the registration of up to 100,000 chemicals, including intermediaries and polymers. Detailed economic studies have shown that implementing this regulation is expected to involve significant costs and administrative burden.

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 could affect TOTAL’s operations in the future.

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In March 2004, the European Union adopted aThe 2009 Directive on Environmental Liability. This directiveCarbon Capture and Storage (CCS) was transposed into EU Member State national legislations in 2007 and 2008, and in France in August 2008. The directive seeks2010. This legal framework forms the basis for developing CCS projects that are expected to implement a strict liability approachserve as one of the most valuable solutions for damage to biodiversity from high-risk operations.

Directives implementing the Aarhus Convention concerning public information rightsreduction of carbon dioxide emissions. Such regulations will have technical and certain public participation rights in a variety of activities affecting the environment were adopted in January and May 2003, respectively.

In November 2008, the European Commission adopted an environmental protection directive which obliges EU Member States to provide for criminal penalties in respect of serious infringements of EC law. Member States must transpose this directive into their national legislation by December 26, 2010.

In the United States, wherefinancial impacts, including on TOTAL’s operations are less extensive than in Europe, TOTAL is also subject to significant environmental and safety regulation.projects.

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:

 

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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 of hazardous substances sent to a site. The U.S. Environmental Protection Agency 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 for injuries to natural resources (e.g., rivers and wetlands) arising from contamination.

National and international maritime oil spill laws, regulations and conventions, including the Oil

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.


Pollution Act of 1990, which imposes significant oil spill prevention requirements, spill response planning obligations, ship design requirements (including in certain instances double hull requirements), operational restrictions and spill liability for tankers and barges transporting oil, offshore oil platform facilities and onshore terminals.

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 specific and hazardous air pollutants; stringent pollutant emission limits; construction and operating permits for major 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 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 stormwater 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.

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Other significant U.S. environmental legislation includes the Toxic Substances ControlThe Comprehensive Environmental Response, Compensation, and Liability Act (also known as CERCLA or Superfund), under which regulates the development, testing, import, exportwaste generators, former and introduction of new chemical products into commercecurrent site owners and the Emergency Planningoperators, and Community Right-to-Know Act, which requires emergency planningcertain other parties can be held jointly and spill notification as well as public disclosure of chemical usage and emissions. In addition, the Occupational Safety and Health Act, which imposes workplace safety and health, training and extensive process safety standards to reduce the risks of chemical exposure and injury to employees, has a significant impact on U.S. operations due to the comprehensive nature of its regulations which directly affect numerous aspects of refinery and chemical plant operations.

Environmental regulation of industrial activities in the United States is extensive at both the federal and state levels. One area of particular focusseverally 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 is emissions of greenhouse gases (primarily carbon dioxide) and their effect on the Earth’s climate. Although emissions of carbon dioxide from industrial processes are not currently regulated, it appears increasingly likely that the U.S. government will, in the future, seekstates may also sue responsible parties under CERCLA for damage to impose restrictions on greenhouse gas

emissions from industrial sources, institute a greenhouse gas cap and trade system for large industrial facilities, or otherwise regulate emissions of carbon dioxide as a criteria pollutant under the Clean Air Act.

Proceedings instituted by governmental authorities are pending or known to be contemplated against certain U.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 group, expected to have a material adverse effect on TOTAL’s consolidated financial position or profitability.

Risk evaluation

Prior to developing their activities and then on a regular basis during the operations, business units evaluate the related industrial and environmental risks, taking into account the regulatory requirements of the countries where these activities are located.

On sites with significant technological risks, analyses are performed for new developments, updated in case of planned significant modifications of existing equipment, and periodically re-evaluated. To harmonize these analyses and reinforce risk management, TOTAL has developed a group-wide methodology which is being implemented progressively throughout the sites it operates. In France, all the sites that meet the criteria of the European Union Seveso II directive are developing 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. The texts implementing these aspects of the law of July 30, 2003 were published at the end of 2005 and during 2006.

Similarly, environmental impact studies are done prior to any industrial development with a thorough initial site analysis, taking into account any special sensitivities and plans to prevent and reduce the impact of accidents. These studies also take into account the impact of the activities on the local population, based on a common methodology. In countries where prior authorization and supervision is required, the projects are not undertaken without the authorization of the relevant authorities according to the studies they are provided with.

For new products, risk characterizations and evaluations are performed. 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.


The Group’s environmental contingencies and asset retirement obligations are addressed 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.

Risk management

Risk evaluations lead to the establishment of management measures that are designed to minimize the risks of accidents and to limit their consequences and environmental impacts. These measures concern the equipment design itself, the reinforcement of safety devices, the design of structures to be built and the protection against the consequences of environmental events. Risk evaluations may be accompanied, on a case-by-case basis, by an evaluation of the cost of risk control and impact reduction measures.

TOTAL is working to minimize industrial and environmental risks inherent to its activities by putting in place performance procedures and quality, safety and environmental management systems, as well as by moving towards obtaining certification for or assessment of its management systems (including International Safety Rating System, ISO 14001, European Management and Audit Scheme), by performing detailed inspections and audits, training staff and heightening awareness of all the parties involved, and by an active investment policy.

More specifically, following up on the 2002-2005 plan, an action plan was defined for the 2006-2009 period. This plan is focused on two initiatives for improvement: reducing the frequency and seriousness of on-the-job accidents and strengthening the management of industrial risks. The results related to reducing on-the-job accidents are in line with goals, with a significant decrease in the rate of accidents (with or without time-lost) per million hours worked by nearly 75% between the end of 2001 and the end of 2008. In terms of industrial risks, this plan’s initiatives include specific organization and behavioral plans as well as plans to minimize risks at source and increase safety for people and equipment use.

Several environmental action plans have been put in place in different activities of the Group covering periods up until 2012. These plans are designed to improve environmental performance, particularly regarding the use of natural resources air(e.g., rivers and water pollution, waste production 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

and treatment,worst case discharge, and site decontamination. They also contain quantified objectives to reduce greenhouse gas emissions, water pollution and sulphur dioxide emissions and to improve energy efficiency.

As part of its efforts to reduce greenhouse gases and combat climate change, in December 2006 the Group committed to reducing gas flaring at its Exploration &

Production sites by 50% compared to 2005 volumes by 2012. By the end of 2009, the Group intends to obtain ISO 14001 certification for all of its sites that it considers particularly important to the environment (as of today, 80% of such sites are so certified). More than 250 of the Group’s sites worldwide are certified ISO 14001. These activities are monitored through periodic, coordinated reporting by all Group entities.

The Group believes that, according to its current estimates, contingencies or liabilities related to health, safety and environmental concerns would not have a material impact on its consolidated financial situation, its cash flow or its income. Due to the nature of such concerns, however, it is impossible to predict whether additional future commitments or liabilities could have a material adverse effect on the Group’s activities.

Asbestos

Like many other industrial groups, TOTAL is involved in claims related to occupational diseases caused by asbestos exposure. The circumstances described in these claims 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 activities 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 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 claims may be filed in the years to come. Asbestos-related issues have been subject to close monitoring in all branches of the Group. As of December 31, 2008, the Group estimates that the ultimate cost of all asbestos-related claims paid or pending is not likely to have a material adverse 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 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 activities 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 activities can be limited, delayed or cancelled as a result of numerous factors, such as administrative delays, particularly in terms of the host states’ approval processes for development projects, shortages, late delivery of equipment and weather conditions, including the risk of hurricanesoperators in the Gulf of Mexico. Some of these risks may also affect TOTAL’s projectsMexico are required to develop and facilities further down the oilimplement a Safety and gas chain.Environmental Management Systems program.

Economic or political factors

The oil sector is subject to domestic regulations and the intervention of governments

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 Community Right-to-Know Act, which requires emergency planning and spill notification as well as public disclosure of chemical usage and emissions.

TOTAL’s facilities in the United States are also subject to extensive workplace safety regulations promulgated by the Occupational Safety and Health Administration (“OSHA”). Most notable among OSHA regulations is the Process Safety Management of Highly Hazardous Chemicals, 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 modifications to existing processes, as well as a comprehensive and continual monitoring and management process for these chemicals.

The EPA’s regulation of GHG emissions from industrial sources under the Clean Air Act’s Prevention of Significant Deterioration and Title V operating permit programs formally commenced on January 2, 2011. The authority to regulate GHG emissions under the Clean 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 regulate GHG emissions under the Clean Air Act. Each of these rulemakings is under legal challenge. The EPA may issue future regulations requiring additional industry sectors to report GHG emissions and has indicated its intention to phase in GHG permitting for 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 the content of future GHG regulations, TOTAL subsidiaries in the United States may incur additional capital and operating costs to comply with control technology and/or facility upgrade requirements for reducing GHG emissions.

TOTAL has investments in the United States in 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, profitability and future investments in these unconventional gas plays.

Proceedings instituted by governmental authorities are pending or known to be contemplated against certain U.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.

Management and monitoring of industrial and environmental risks

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 of the countries where these activities are carried out and generally accepted standards.

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.

In particular, TOTAL has developed common methodologies for analyzing technological risks which must gradually be applied to all activities carried out by the Group’s companies.

Management

TOTAL develops risk management measures based on risk and impact assessments. These measures involve facility and structure design, the reinforcement of safety devices and remedies of environmental degradations.

In addition to developing organizations and management systems as described above, TOTAL strives to minimize industrial and environmental risks inherent in its operations by conducting thorough inspections and audits, training personnel and raising awareness among all those involved, and implementing an active investment policy.

In addition, performance indicators (in the areas of HSE) and risk monitoring have been put in place, objectives have been set and action plans have been implemented to achieve these objectives.

Although the emphasis is on preventing risks, TOTAL takes regular steps to prepare for crisis management based on the risk scenarios identified.

In particular, TOTAL has developed emergency plans and procedures to respond to an oil spill or leak. These plans and procedures are specific to each TOTAL affiliate and adapted to its organization, activities and environment, and are consistent with the Group plan. They are reviewed regularly and tested through exercises.

At the Group level, TOTAL has set up the alert scheme PARAPOL (Plan to Mobilize Resources Against Pollution) to facilitate crisis management and provide assistance by mobilizing both internal and external resources in the event of pollution of marine, coastal or inland waters, without geographical restriction. The PARAPOL procedure is made available to TOTAL affiliates and its main goal is to facilitate access to internal experts and physical response resources.

Furthermore, TOTAL and its affiliates are currently members of certain oil spill cooperatives that are able to provide expertise, resources and equipment in all

geographic areas where TOTAL has operations, including in 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.

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, the characteristics of hydrocarbons and 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 canceled as a result of a number of factors, including administrative delays, in particular 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;

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 higher than those applicable to other commercial businesses and which may be subject to material changes 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. Such oil and gas reserves and related operations are subject to certain additional risks, including:

the implementation of production and export quotas;

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.

Business Activities in Cuba, Iran, Sudan and Syria

Provided in this section is certain information relating to TOTAL’s activities in Cuba, Iran, Sudan and Syria.

For more information on U.S. and EU restrictions relevant to our activities in these jurisdictions, see “Item 3. Key Information — Risk Factors”.

Cuba

In 2011, 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€40 million.

Iran

TOTAL’s Exploration & Production division historically 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.

TOTAL 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. Since 2011, TOTAL has no production in Iran corresponding to such payments in kind, compared to 2 kboe/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 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, produced and marketed small quantities of lubricants (20,000 tons) for sale to domestic consumers in Iran. In 2011, revenue generated from Beh Total’s activities was€43.5 million and cash flow was€4.6 million. Beh Total paid approximately€1 million in taxes. TOTAL does not own or operate any refineries or chemicals plants in Iran. In 2011, Beh Total paid€5.6 million of dividends for fiscal year 2010 (share of TOTAL:€2.3 million).

In 2011, TOTAL’s Trading & Shipping division purchased in Iran pursuant to a mix of spot and term contracts approximately forty-nine million barrels of hydrocarbons from state-controlled entities for approximately€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 what was, prior to July 9, 2011, the southern region of Sudan.

TOTAL disbursed in Sudan between January 1, 2011 and July 8, 2011, approximately $0.7 million as scholarships and social development contributions, as well as contributions to the construction of social infrastructure,

schools and water wells along with non-governmental organizations and other stakeholders involved in southern Sudan.

For more information on TOTAL’s activities in the Republic of South Sudan, see “Item 4. Business Overview — Republic of South Sudan”.

Syria

In 2011, TOTAL had two contracts relating to oil and gas exploration & production 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 additional 10-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 operated 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).

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 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 financed and implemented the Tabiyeh Gas Project and operated the Tabiyeh field.

In 2011, technical production for PSA 1988 and the Tabiyeh contract taken together amounted to 63 kboe/d, of which 53 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 addition, 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 activities that contribute to oil and gas production in Syria.

In 2011, TOTAL’s Trading & Shipping division purchased in Syria pursuant to a mix of spot and term contracts nearly eleven million barrels of hydrocarbons from state-controlled entities for approximately€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, 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 with the Group’s insurance management and is used as a centralized global operations tool for covering the Group’s risks. It allows the Group’s worldwide insurance program to be implemented in compliance with the specific 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

 

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; and

possible, though exceptional, nationalization, expropriation or reconsideration of contract rights.

The oil industry is also subject to the payment of royalties and taxes, which may be high compared with those imposed with respect to other commercial activities and which may be subject to material modifications by the governments of certain countries.

Substantial portions of TOTAL’s oil and gas reserves are located in certain countries which may be considered politically and economically unstable. These reserves and the related operations are subject to certain additional risks, including:

the establishment of production and export limits;

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 impairment of operations due to armed conflicts, civil unrest or the actions of terrorist groups.

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.

Regulations concerning Iran and Sudan(1)

In September 2006, the U.S. legislation implementing sanctions against Iran and Libya (Iran and Libya Sanction Act, referred to as “ILSA”), was amended and extended until December 2011. Pursuant to this statute, which now concerns only Iran (Iran Sanctions Act, referred to as “ISA”), the President of the United States is authorized to initiate an investigation into the possible imposition of sanctions (from a list that includes denial of financing by the U.S. Export-Import Bank and limitations on the amount of loans or credits available from U.S. financial institutions) against persons found, in particular, to have knowingly made investments of $20 million or more in any 12-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. It also prohibits TOTAL from extending its waiver for South Pars to other activities.

In each of the years since the passage of ILSA (now ISA) until 2007, TOTAL made investments in Iran (excluding South Pars) in excess of $20 million. TOTAL’s activities in


Iran are currently limited mainly to the implementation of two buyback contracts signed between 1995 and 1999 for two permits on which the Group is no longer the operator. As a result, TOTAL’s involvement consists essentially in being reimbursed for its past investments. In 2008, TOTAL’s production in Iran was 8.8 kboe/d, approximately 0.4% of the Group’s worldwide production. TOTAL does not believe that its activities in Iran have a material impact on the Group’s results.

In the future, TOTAL may decide to invest amounts in excess of $20 million per year in the country. TOTAL cannot predict interpretations of or the implementation policy of the U.S. government under ISA with respect to its possible future activities in Iran. It is possible that the United States may determine that these or other activities constitute activity prohibited by ISA and will subject TOTAL to sanctions. TOTAL does not believe that enforcement of ISA, including the imposition of the maximum sanctions under the current applicable law and regulations would have a material negative effect on its results of operations or financial condition.

France and the European Union have adopted measures, based on United Nations Security Council resolutions, that 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. As currently applicable, the Group believes that these measures do not cover TOTAL’s activities and projects in this country.

TOTAL has no active business in Sudan. TOTAL has no oil or gas production in Sudan and, to date, has not made any significant investments or industrial investments there.

TOTAL holds a 32.5% interest in Block B in southern 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 EPSA was revised, effective December 21, 2004, and provided that the parties (the Government of Sudan and the consortium partners) would mutually agree upon a resumption date when the petroleum operations could be undertaken physically 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 occurred yet.

If TOTAL were to resume its activities in southern Sudan, it would do so in compliance with applicable national, European and international laws and regulations, as well as with the Group’s Code of Conduct and Ethics Charter. Within the Group’s scope of operations and authority, it is committed to upholding human rights and fundamental freedoms, including social, economic and cultural rights, and the rights and interests of local residents, minorities and any other vulnerable groups. In particular, the Group will study the situation with non-governmental organizations and stakeholders involved in southern Sudan and conduct socio-economic programs adapted to the needs of the local population. Significant programs were launched at the end of 2008 in the fields of access to potable water, social infrastructures and schools with two international non-governmental organizations present in the region.

Certain U.S. states have adopted legislation requiring state pension funds to divest themselves of investments in any company with active business operations in Iran or Sudan. On December 31, 2007, the U.S. Congress adopted the Sudan Accountability and Divestment Act, which supports these state legislative initiatives. If TOTAL’s activities in Iran or Sudan were determined to fall within the prohibited scope of these laws, and TOTAL were to not qualify for exemptions provided by such laws, certain U.S. state pension funds holding interests in TOTAL may be required to sell their interests. If significant, such sales could have an adverse effect on TOTAL’s share price.

Furthermore, the United States currently imposes economic sanctions, which are administrated by the U.S. Treasury Department’s Office of Foreign Assets Control and which apply to U.S. persons, with the objective of denying certain countries, including Iran, Syria and Sudan, the ability to support international terrorism and, additionally in the case of Iran and Syria, to pursue weapons of mass destruction and missile programs. TOTAL does not believe that these sanctions are applicable to any of its activities in these countries.

CompetitionSource: Reuters.

The Group is subject to intense competition within the oil sector and between the oil sector and other sectors aiming to fulfill the energy needs of the industry and of individuals. 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. Competition is particularly strong with respect to the acquisition of resources of oil and natural gas, which are in great demand. Competition is also intense in the sale of manufactured products based on crude and refined oil.

In this regard, the major international oil companies in competition with TOTAL are ExxonMobil, Royal Dutch Shell, Chevron and BP. As of December 31, 2008, TOTAL ranked fifth among these companies in terms of market capitalization.(1)


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 insurance market by taking on a greater or lesser amount of risk corresponding to the price trends in the insurance market.

In 2011, the net amount of risk retained by OIRC after reinsurance was a maximum of $75 million per third-party liability insurance claim and $75 million per property damage and/or business interruption insurance claim. Accordingly, in the event of any loss giving rise to an aggregate insurance claim, the effect on OIRC would be limited to its maximum retention of $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:

 

(1)Source: Reuters.

Insurance and risk management

Organization

TOTAL has its own insurance and reinsurance company, Omnium Insurance and Reinsurance Company (OIRC). OIRC is integrated into 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 its worldwide insurance program in compliance with the various regulatory environments in the countries where the Group operates.

Some countries 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 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 insurance market by taking on a greater or lesser amount of risk corresponding to the price trends in the insurance market.

In 2008, the net amount of risk retained by OIRC after reinsurance was 50 M€ per property/business interruption insurance claim and 60 M€ per third party liability insurance claim.

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);

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

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 2011 for its main refining and petrochemical sites.

For example, for the Group’s highest risks (platforms in the North Sea and main refineries and petrochemical plants in Europe), in 2011 the Group’s share of insurance limit was approximately $1.65 billion for the Downstream segment and approximately $1.5 billion dollars for the Upstream segment.

Deductibles for property damage and third-party liability fluctuate between€0.1 million and€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 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 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.

assess the potential financial impact on the Group in case these disasters should occur;

help in implementing measures to limit the probability of the event and the extent of the occurrences 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.

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. The insurance cap in 2008 for general and product liability was $800 million.

Property damage and business interruption: the amounts insured by sector and by site are based on estimated costs and reconstruction scenarios under the estimated maximum loss scenarios and on insurance market conditions. The Group subscribed for business interruption coverage in 2008 for its main refining and petrochemical sites.

For example, for the highest estimated risks of the Group (main European refineries), the limit of indemnity was $1.4 billion in 2008.

Deductibles for property damages fluctuate between 0.1 M€ and 10 M€ depending on the level of risk, and are borne by the subsidiary. For business interruption, they represent 60 days.

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. The Group cannot guarantee that it will not suffer any uninsured loss.


Organizational Structure

TOTAL S.A. is the parent company of the TOTAL Group. As of December 31, 2008,2011, there were 721870 consolidated subsidiaries, of which 622783 were fully consolidated, 12 were proportionately consolidated and 87 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.

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 v.vi.


 

Overview

OVERVIEW

 

 

TOTAL’s results are generally 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, untilcrude oil and natural gas prices have varied greatly. As TOTAL reports its results in euros, but conducts its operations mainly in dollars, the fourth quartereffect of 2008 when prices dropped sharply, TOTAL has benefited from a sharp an

increase in crude oil and natural gas prices which have beenis partly offset by the effect of the variation in part by a significantexchange rates during periods of weakening of the dollar relative to the euro (despite a more recentand strengthened during periods of strengthening of the dollar) as TOTAL reports its results in euros.dollar relative to the euro. TOTAL’s results are also significantly affected by the costs of ourits activities, in particular those related to exploration and production, and by

the outcome of ourits strategic decisions with respect to cost reduction efforts in the current period of significant economic uncertainty.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 oil and gas prices.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”.

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, fuelled by the growth of emerging markets. Pressure on supply, plus rising demand, resulted in a sharp increase in the price of crude oil. The average price of Brent in 2011 was $111/b, compared with $80/b in 2010.

Gas spot prices continued to rise in Europe and Asia in 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.

FollowingDespite the spin-offgradual adjustment of Arkemarefining capacity, the overcapacity that has existed in May 2006, the 2006 income statement figures forEuropean refining market since 2009 continued into 2011, due to low demand in Europe. Refining margins dropped to an average of $17/t in 2011, compared with $27/t in 2010(1). In the Group andfirst half of 2011, the Chemicals segment (withenjoyed a globally favorable environment, which has deteriorated since then. In the exceptionsecond half of the year, the Base Chemicals and Specialty Chemicals divisions saw their margins shrink due to the drop in demand caused by the economic slowdown.

In this environment, TOTAL’s net income (Group share) amounted to€12.3 billion, up 16% compared to€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 income)operating income dropped by 10% to€775 million in 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 Group’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 rise 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’s bolder exploration strategy. The year 2011 also witnessed the successful start-up of the Pazflor deep-offshore platform in Angolan 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%), as wellwere 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 acquiring stakes in promising exploration areas, such as the return on average capital employed (ROACE)(1) for the Chemicals segment, have been recalculated pursuant to IFRS to exclude contributions from the activities of Arkema to the Chemicals segment. The Arkema spun-off activities are treated as “discontinued operations”, the results of which are presented on the corresponding linepre-salt blocks in the income statement.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 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)ROACEBased on TOTAL’s “European Refining Margin Indicator” (ERMI).
(2)Net-debt-to-equity ratio = adjusted net operating incomedebt (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 average capital employed. For more information on ROACE, see “— Results 2006-2008 — Business Segment Reporting” belowthe sum of shareholders’ equity and Note 2 to the Consolidated Financial Statements included elsewhere herein.non-controlling interests after expected dividends payable.

(3)Total Recordable Injury Rate.

2006-2008 resultsin high-growth areas. Consequently, 2011 saw the start-up of the deep-conversion unit (or coker) in Port Arthur in the United States, the continued modernization of the refinery and the 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 Spanish company CEPSA.

TOTAL’s net income (Group share)On the Marketing front, in 2011, the Group continued its optimization drive by selling off its distribution activities in the United Kingdom and launching a program to modernize part of its service station network in France with the Total access program. In the Specialty Chemicals division, the Group sold part of its Resins activity.

A restructuring of the Downstream and Chemicals sectors was 10,590 Mannounced 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 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 oil products field.

The process initiated in 2004 to increase R&D budgets continued with expenditures in 2011 of€ in 2008776 million, up 9% compared to 13,181 M€2010, with the aim of, in 2007. The 20% decrease in net income in 2008 compared to 2007 was mainly due toparticular, the negative after-tax impactcontinued improvement of prices on inventory valuation (-3.8 B€), due to the sharp drop in oil pricesGroup’s technological expertise in the last quarterdevelopment of 2008. Other factors contributingoil and gas resources and the development of solar, biomass, carbon capture and storage technologies in order to the variation in net income in 2008 comparedcontribute to 2007 consisted mainly of: the weaker dollar (-0.8 B€); special items (-0.5 B€); higher Upstream costs (-0.5 B€); lower production (-0.5 B€); less favorable results from U.S. refining, mainly due to a less favorable business environment and hurricanes (-0.2 B€); a less favorable environmentchanges in the Chemicals business (-0.2 B€global energy mix.);

Finally, in 2011, TOTAL reasserted the Group’s equity sharepriority 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 puts an emphasis on corporate social responsibility (CSR) challenges and the development of the amortizationlocal economies.

Outlook

In 2012, TOTAL intends to consolidate its drivers for growth and enhance the priority given to safety, reliability and acceptability of intangibles relatedits operations.

The 2012 net investment budget is $20 billion (approximately€14.3 billion(1)). TOTAL intends to the Sanofi-Aventis merger (-0.1 Bcontinue

to actively 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 asset sales) is $24 billion (approximately€); and a decrease in income from equity affiliates in the Downstream segment, mainly due to losses incurred through TOTAL’s participation in Wepec, its affiliate for refining in China (-0.1 B€). These negative impacts were partially offset by the positive impacts of higher hydrocarbon prices (+3.5 B€) and a more favorable Downstream business environment (+0.6 B€)17.1 billion).

The 12% increase in TOTAL’s net income (Group share) in 2007 compared to 2006 was mainly due toCapital expenditures will mostly be focused on the positive after-tax impactUpstream segment with an allocation of prices on inventory valuation (+1.7 B$20 billion (approximately€)14.3 billion), or more than 80% of the overall more favorable environment (+0.6 B€), production growthGroup’s organic capital expenditure budget. About 30% of the investment in the Upstream segment (+0.6 Bis expected to be dedicated to producing assets while 70% is expected to be assigned to developing new projects. Downstream organic capital expenditures in the Refining & Chemicals and Supply & Marketing segments are expected to amount to $3 billion (approximately€)2.1 billion) and $1 billion (approximately€714 million), respectively, in 2012. In line with the strategy to develop a number of major integrated platforms in order to stimulate growth and productivity plansimprove competitive performance, the main projects in the Downstream andRefining & Chemicals segments (+0.3 B€), which were partially offset bysegment in 2012 will be the negative impactsupgrading of the weaker dollar (-1.0 B€), higher costsNormandy refinery and petrochemical plant, the building of the Jubail refinery in Saudi Arabia and the expansion of the Daesan platform in South Korea. Wherever it operates, TOTAL will continue to make capital expenditure in the Upstreammaintenance and Downstream segments (-0.4 B€), increased exploration expense (-0.3 B€) and the higher net costsafety of net debt for the Group (-0.1 B€ ).its facilities a top priority.

The Group’s expenditures(1)Group also confirms its commitment with respect to R&D with a budget increasing to about $1.2 billion (approximately€857 million) in 2008 were 13,640 M€ compared to 11,722 M€ in 2007 and 11,852 M€ for 2006. Included in the 2008 expenditures are 1,022 M€ of acquisitions reflecting mainly the acquisitions of Synenco in Canada and Goal in The Netherlands, the acquisition of a 60% stake in the Bemolanga permit in Madagascar and payments for new permits and contract extensions in Nigeria and Libya. Included in the 2007 expenditures are approximately 0.2 B€ of acquisitions related primarily to new permits. In 2006, expenditures included approximately 0.8 B€ for acquisitions, principally Ichthys LNG and Tahiti.2012.

Divestments in 2008 amounted to 2,585 M€ compared to 1,556 M€ in 2007 and 2,278 M€ in 2006. Divestments in 2008 included asset sales of 1,451 M€, consisting mainly of the sale of Sanofi-Aventis shares. The 2007

divestments included Upstream assets in Canada, the UK and Norway and Downstream assets in the UK, as well as the sale of shares representing 0.4% of Sanofi- Aventis in the fourth quarter. In 2006, divestments included the sale of Upstream assets in the United States and in France as well as the reimbursement of carried investments on Akpo in Nigeria and the sale of non-strategic financial assets.

In each of the three years, the main source of funding for expenditures was cash from operating activities.

Outlook

In the Upstream segment, TOTAL benefits from the high-qualitywill deploy its strategy intended to speed up growth of its portfolio. Production start-ups for severalproduction, 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 major projects planned for 2009 include Akpoon-stream, which will contribute to expected growth in output in 2012 and achieving the target rate of average annual production growth of 2.5% between 2010 and 2015: Usan and OML 58 Upgrade in Nigeria, Yemen LNG and Qatargas II. In addition, engineering studies for the next wave of major projects that are expected to be launched between 2009 and 2010 are ongoing, notably for Egina in Nigeria, Laggan TormoreIslay in the UK North Sea, ShtokmanAngola LNG in Russia, IchthysAngola, Bongkot South in AustraliaThailand, Halfaya in Iraq, Sulige in China and certain heavy oilKashagan in Kazakhstan. The Group will also continue to evaluate numerous other projects, in particular in Western Africa, Russia and Canada. The Group seeks to maintain its technical costs at oneanticipated launch of these projects during the course of the lowest levels among the major oil and gas companies, which it considers one of its competitive advantagesnext two years should improve visibility on growth in a weaker oil market environment. In addition, TOTAL is continuing with its effortsoutput after 2015. With an exploration budget that stands at $2.5 billion (approximately€1.8 billion), up 20% compared to improve the reliability of its facilities and to emphasize safety throughout its operations.

In the Downstream and Chemicals segments,2011, the Group will define the necessary changes neededcontinue to adapt its industrial assets to new trends in market demand. At the same time, major construction projects are continuing, notably for the modernization of the Port Arthur refinery in the United States, the Jubail refinery project in Saudi Arabiapursue an ambitious and the start-up of the Qatofin cracker in Qatar.

The 2009 budget for capital expenditures, which is comparable to the 2008 budget, is approximately 14 B€(2), with 75% of it allocated to the Upstream segment.diversified strategy.

TOTAL is actively seeking to reduce the cost of its projects by reviewing contractual terms, technical plans and project timing. The Group has implemented company-wide productivity plans to reduce costs and to lower breakeven points for its operations.

In an environment marked by significant economic weakness, TOTAL continues to adhere to its strategy of strict financial discipline and is committed to taking the actions necessary to adapt and rebalance its industrial assets. TOTAL believes that a solid financial base should


 

 

(1)Expenditures include intangible assets and property, plant and equipment additions; acquisitionsAll euro figures in this section converted at a rate of subsidiaries, net of cash acquired; investments in equity affiliates and other securities; and increases in non-current loans.$1.40/€.
(2)Including net investments in equity affiliates and non-consolidated companies, excluding acquisitions, based on€1 = $1.30 for 2009.

In the Downstream sector, with a new organization that will allow it to take up the companychallenges specific to pursueeach activity of that sector, the Group should start to reap the first benefits of an integrated Refining & Chemicals segment and Supply & Marketing segment, each of which is closer to its markets. TOTAL will strive to improve its competitiveness by adapting its activities in Europe and 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 sustained investmentnew polyethylene production unit in Qatar and the completion

of the first step of the expansion of its Daesan platform in South Korea.

In 2012, TOTAL can rely on its solid balance sheet and on the start-up and ramp-up of new projects that should contribute to the growth of operating cash flow. Moreover, in 2012, TOTAL will continue to develop its new projects through an ambitious capital expenditure program, to preparewhile maintaining a target for the long term, while also maintaining good profitability, itsnet-debt-to-equity ratio of between 20-30% and a dividend policy and a net-debt-to-equitybased on an average pay-out ratio around 25-30%. In addition, the Company plans to continue to progressively divest its Sanofi-Aventis shares over the short to medium term to give the Group a certain amount of financial flexibility to50% of adjusted fully-diluted earnings per share(1).

adapt its financial resources to its growth and dividend strategies.

Since the beginning of 2009, the price of Brent has traded around $45 per barrel. Additional production cuts announced by OPEC may better balance existing supply to the currently weakened market demand.


 

Critical Accounting Policies

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 Update No. 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;

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 will bewere used for the 2009 year-end estimation of reserves and have not been usedbeginning in the determination of reserves for the year-end 2008.2009. Proved oil and gas reserves are the estimatedthose quantities of crude oil naturaland gas, and natural gas liquids which, geologicalby analysis of geoscience and engineering data, demonstratecan be estimated with reasonable certainty to be recoverable in future yearseconomically producible from a given date forward, from known reservoirs, and under existing economic conditions, operating methods, and operating conditions. Accordingly, thesegovernment 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 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 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 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.

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, requires 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, future per-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 include lower-than-forecastedlower-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, as well as political, environmental, safety and public expectations.

The Group also makes judgments and estimates in recording costs and establishing provisions for environmental clean-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 in clean-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 from year-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 a country-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 relatedhealthcare-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 20082011 amounted to 232 M€315 million and the Company’s contributions to pension plans were 855 M€.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, 2008,2011, were 953 M€1,713 million compared to 160 M€1,170 million for 2007.2010. The increase in unrecognized actuarial losses is explained by actuarial losses due to a decrease in discount rates in 2011 and due to a decrease in the value of plan assets that were partially offset by an increase in discount rates in 2008.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 15fifteen years.

While theThe Company has not completed its calculations for 2009, it is considering a decreased weighted-average expected rate of return on pension plan assets of 5.35% for the year (6.13%2012 compared to the 20082011 rate of 6.60%), due to a change in the pension assets allocation as of December 31, 2008, that was partially offset by an increase in discount rates in 2008.5.90%. 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 66 M€62 million decrease or increase, respectively, in the 20082011 net periodic pension cost. The estimated impact on expensenet periodic pension cost of the amortization of the unrecognized actuarial losses of 953 Mpension benefits of€1,713 million as of December 31, 2008,2011, is 99 M€102 million for 2009,2012, compared to 20 Mthe actual impact of€ in 2008.46 million for 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 2006-2008RESULTS 2009-2011

 

 

As of and for the year ended December 31, (M€, except per share data)  2008  2007  2006

Sales(a)

  179,976  158,752  153,802

Net income (Group share)

  10,590  13,181  11,768

Diluted earnings per share

  4.71  5.80  5.09

Investments

  13,640  11,722  11,852

Divestments

  2,585  1,556  2,278

Cash flow from operating activities

  18,669  17,686  16,061

(a)Pursuant to IFRS 5, excludes contributions from Arkema in 2006.
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  

 

Group Results 20082011 vs. 20072010

Unprecedented volatility markedThe year 2011 witnessed a number of geopolitical events that put pressure on market supplies. Despite the 2008economic 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.

In the Upstream segment, the 2011 oil market environment. 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 parthalf 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 pricedrop in demand caused by the economic slowdown.

Consolidated sales of Brent crude climbed rapidly toward $150/b. InTOTAL 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 second partUpstream, 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 year,increase in hydrocarbon prices on the global economy sufferedUpstream segment’s results. The after-tax inventory valuation effect (as defined below under “— Business

Segment Reporting”) had a sharp slowdown, which contributed to driving Brent down to a new low for the year of $35/b in December. The average Brent oil price in 2008 increased by 34% to $97.30/b from $72.40/b in 2007, and its price averaged $55/b for the fourth quarter of 2008. Refining margins also increased in 2008, with the European refining margin indicator used by TOTAL’s management (TRCV) up 16% to $37.80/t from $32.50/t in 2007. The Chemicals environment weakened in 2008 compared to 2007, turning sharply negative at year-end due to decreasing demand resulting from the global economic slowdown. While the dollar lost 7% of its value against the euro during 2008, with the average dollar/euro exchange rate being $1.47/€ in 2008 compared to $1.37/€ in 2007, it did gain 14% against the euro during the fourth quarter.

TOTAL’s consolidated sales increased by 13% to 180.0 B€ in 2008 from 158.8 B€ in 2007.

TOTAL’spositive impact on net income (Group share) was 10,590 Mof€834 million in 2008 compared2011 and a positive impact of€748 million in 2010, in each case essentially due to 13,181 M€the increase in 2007. The 20% decreaseoil 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 20082011. 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 2007€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 the negative after-tax impact of prices on inventory valuation (-3.8 B€), due to the sharp drop in oil pricesan increase in the last quarterportion of 2008. Other factors contributing to the decrease in net income in 2008 compared to 2007 consisted mainly of: the weaker dollar (-0.8 B€); special items (-0.5 B€); higher Upstream costs (-0.5 B€); lower production (-0.5 B€); less favorable results from U.S. refining, mainly due to a less favorable business environment and hurricanes (-0.2 B€); a less favorable environment in the Chemicals business (-0.2 B€); the Group’s equity share of the amortization of intangibles relatedincome before tax attributable to the Sanofi-Aventis merger

(-0.1 B€); andentities with a decrease in income from equity affiliates in the Downstream segment, mainly due to losses incurred through TOTAL’s participation in Wepec, its affiliate for refining in China (-0.1 B€). These negative impacts were partially offset by the positive impacts of higher hydrocarbon prices (+3.5 B€) and a more favorable Downstream business environment (+0.6 B€).

The effectivelocal tax rate formuch higher than the Group was 56.3% in 2008 compared to 55.6% in 2007 due primarily to the relatively higher comparative weightFrench tax rate (36.10%). The portion of the Upstream segmentincome before tax represented 89% in the Group’s results.2011, unchanged from 2010.

In 2008, theThe Group boughtdid not buy back 27.6 million of its shares(1) for 1,339 M€. in 2011. The number of fully-diluted shares at December 31, 2008,2011, was 2,2352,263.8 million compared to 2,2652,249.3 million at December 31, 2007.2010.

DilutedFully-diluted earnings per share, based on 2,2472,257 million fully-diluted weighted-average shares, decreased by 19%was€5.44 in 2011 compared to€4.71 in 2008 from€5.80 in 2007.

Group Results 2007 vs. 2006

The average oil market environment in 2007 was marked by higher oil prices, with the average Brent oil price increasing 11% to $72.40/b from $65.10/b in 2006. Refining margins also increased in 2007, with the European refining margin indicator used by TOTAL’s management (TRCV) up 12% to $32.50/t from $28.90/t in 2006. The environment for Chemicals weakened in 2007 compared to 2006, essentially due to the negative impact on petrochemical margins from the rapid2010, an increase in the price of naphtha late in 2007. The average dollar/euro exchange rate was $1.37/€ in 2007 compared to $1.26/€ in 2006, an 8% decline in the value of the dollar.

TOTAL’s consolidated sales increased by 3% to 158.8 B€ in 2007 from 153.8 B€ in 2006.15%.


 

 

(1)Includes 2.8 million shares purchased to cover restricted share grants pursuant to the decision of the Board on September 9, 2008.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 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 ERMI was $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 Chemicals division’s market, as well as an increase in demand in the Specialties Chemicals division’s market.

Consolidated sales of TOTAL were€159.3 billion in 2010, an increase of 21% from€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) was 13,181 Min 2010 increased by 25% to€10,571 million from€8,447 million in 2007 compared to 11,768 M€ in 2006. The 12% increase in net income in 2007 compared to 2006 was2009, mainly due to the positiveincrease in hydrocarbon prices and production, as well as a rebound in the Chemicals segment. The after-tax impactsimpact of prices on inventory valuation (+1.7 B€), the overall more favorable environment (+0.6 B€), growth in the Upstream segment (+0.6 B€) and growth and productivity plansaccounted for in the Downstream and Chemicals segments (+0.3 Bhad a positive impact on net income (Group share) of€), which were partially offset by748 million in 2010 and a positive impact of€1,533 million in 2009, in each case due to the negative impactsincrease in oil prices. For a discussion of the weaker dollar (-1.0 B€), higher costsimpact of prices on inventory valuation in the UpstreamDownstream and DownstreamChemicals segments (-0.4 Bsee “— Business Segment Reporting” below. Special items had a negative impact on net income (Group share) of€), increased exploration expense (-0.3 B384 million in 2010, comprised essentially of asset impairments that had a negative impact of€)1,224 million and the higher net costgains on asset sales that had a positive impact of net debt for€1,046 million. Special items had a negative impact of€570 million in 2009. Effective July 1, 2010, the Group (-0.1 Bno 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. The Group’s share of adjustment items

related to Sanofi had a negative impact on net income (Group share) of€ ).81 million in 2010 (six months) and a negative impact of€300 million in 2009 (full year).

In 2010, income taxes amounted to€10,228 million, an increase of 32% compared to€7,751 in 2009, primarily as a result of the increase in taxable income. The increase in the effective tax rate forfrom 47% in 2009 to 49% in 2010 was mainly due to an increase in the portion of the Group was 56%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 2007, stable2010 compared to 56%with 82% in 2006. The Upstream segment had2009, with a comparable relative weight in the results of both years.

In 2007,corresponding impact on the Group boughteffective tax rate.

The Group did not buy back 32.4 million of its shares(1) for 1,787 M€. in 2010. The number of fully-diluted shares at December 31, 2007,2010, was 2,2652,249.3 million compared to 2,2852,243.7 million at December 31, 2006.2009.

DilutedFully-diluted earnings per share, based on 2,2742,244.5 million fully-diluted weighted-average shares, increased by 14%was€4.71 in 2010, compared to€5.803.78 in 2007 from€5.09 in 2006, slightly greater than the2009, an increase in net income due to the accretive effect of the share buybacks.25%.

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 assetsasset 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.

In accordance with IAS 2, the Group values inventories of petroleum products in the financial statements according to the FIFO (First-In, First-Out) method and other inventories using the weighted-average cost

method. Under the FIFO method, the 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 adjusted results of the Downstream segment and Chemicals segment are 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 mainly in the United States, 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 approximates the LIFO (Last-In, First-Out) method, the variation of inventory valuevalues in the statement of income statement is, depending on the nature of the inventory, determined byusing either the month-end prices differential between one period and another or the average prices of the period rather than the historical value.period. The inventory valuation effect is the difference between the results according tounder the FIFO methodand replacement cost methods.

As from January 1, 2011, the effect 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 replacement cost method. 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 recorded at their fair value based on forward prices. Furthermore, TOTAL, in its trading activities, enters into storage contracts, the future effects of which are recorded at fair value in the Group’s internal economic performance. IFRS, by requiring accounting for storage contracts on an accrual basis, precludes recognition of this fair value effect.

Until June 30, 2010, the Group also adjusted for its equity share of adjustment items related to Sanofi. As of July 1, 2010, Sanofi 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 a segment-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, theThe 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 whichthat are included in net income are only interest expenses related to long-term liabilities net 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) described above.

For further discussion onof the calculation of net operating income and the calculation of ROACE,return on average capital employed (ROACE)(1), see Note 2 to the Consolidated Financial Statements.


 

(1)Includes 2.4 million shares purchased to cover restricted share grants pursuant to the decision of the Board on July 17, 2007.

Upstream results

 

(M€)  2008 2007 2006   2011 2010 2009 

Non-Group sales

  24,256  19,706  20,782    23,298    18,527    16,072  

Operating income(a)

  23,468  19,503  20,307    22,444    17,450    12,858  

Equity in income (loss) of affiliates and other items

  1,541  1,330  1,211    1,596    1,533    846  

Tax on net operating income

  (14,563) (11,996) (12,764)   (13,506)   (10,131)   (7,486) 

Net operating income(a)

  10,446  8,837  8,754    10,534    8,852    6,218  

Adjustments affecting net operating income

  278  12  (45)   (129)   (255)   164  

Adjusted net operating income(b)

  10,724  8,849  8,709    10,405    8,597    6,382  

Investments

  10,017  8,882  9,001    21,689    13,208    9,855  

Divestments

  1,130  751  1,458    2,656    2,067    398  

ROACE

  36%  34%  35%    20%    21%    18%  

 

(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)ROACE = adjusted net operating income divided by average capital employed.

20082011 vs. 20072010

Upstream segment sales (excluding sales to other segments) were up 23%increased by 26% to 24,256 M€23,298 million in 2008 compared to 19,706 M2011 from€18,527 million in 2007,2010, reflecting higher average hydrocarbon prices, which more than offsetessentially the impacts of the decrease of the dollar compared to the euro and a decrease in production.

TOTAL’s average liquids price realization in 2008 increased 32% to $91.1/b from $68.9/b in 2007, in line with the increase in the average Brent price of oil, which was $97.3/b in 2008 compared to $72.4/b in 2007. TOTAL’s average natural gas price realization increased 37% to $7.38/MBtu in 2008 from $5.40/MBtu in 2007.

For 2008, adjusted net operating income for the Upstream segment increased 21% to 10,724 M€ compared to 8,849 M€ in 2007. The increase in adjusted net operating income was mainly due to the positive impacts of the price of hydrocarbons (+3.5 B€) partially offset by the negative impacts of the weaker dollar (-0.6 B€), lower production (-0.5 B€) and higher production costs (-0.5 B€).

The exclusion of special items (which in 2008 comprised principally an asset impairment of 171 M€ on the Joslyn project and the net impact of contract renegotiations of 106 M€) had a positive impact of 278 M€ on adjusted net operating income for the Upstream segment in 2008 compared to a positive impact of 12 M€ in 2007 (comprised principally of asset impairments of 93 M€ largely offset by capital gains of 89 M€).

ROACE for the Upstream segment increased to 35.9% in 2008 from 33.6% in 2007. The increase was mainly due to adjusted net operating income having increased more than the average level of capital employed, which was principally due to higher hydrocarbon prices.

In 2008, Upstream net operating income amounted to 10,446 M€ (for 2007, 8,837 M€) from operating income of 23,468 M€ (for 2007, 19,503 M€), with the difference resulting primarily from taxes on net operating income of 14,563 M€ (11,996 M€ in 2007), partially offset by income from equity affiliates and other items of 1,541 M€ (1,330 M€ in 2007).

Oil and gas production in 2008 averaged 2,341 kboe/d compared to 2,3912,346 kboe/d in 2007.2011, compared to 2,378 kboe/d in 2010. This 2%1.3% decrease was due essentially to the negative impactsresult 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%)(1), unscheduled shutdowns (-2.5%, mainly on the Elgin Franklin field in February, the Bruce and Alwyn fields in the summer and the Al Jurf field from April to the end of December 2008, as described in Item 4 of this Annual Report) andpartially offset by changes in the portfolio (-1%) partially offset by(+2.5%; integrating the positivenet share of Novatek production and the impact of underlying production growththe sale of interests in CEPSA) and the end of OPEC reductions (+3.5%, primarily from production ramp-ups and start-ups of major TOTAL-operated projects, including Dolphin, Rosa, Jura and Dalia, net of the normal decline on existing fields). Underlying production growth in 2008, excluding the price effect and changes in the portfolio, was +1%1%).

The Group’s provedProved reserves at December 31, 2008, remained steady at 10,458 Mboe compared to 10,449based on SEC rules were 11,423 Mboe at December 31, 2007. At2011 (Brent at $110.96/b), compared to 10,695 Mboe at December 31, 2010 (Brent at $79.02/b). Based on the 20082011 average rate of production, these reserves represent approximately 12 years of production.reserve life is thirteen years.

See “Item 4. Information on the Company — Exploration & Production — Reserves” for a table showing changes indiscussion of proved reserves by year 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 for 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 asset impairments.

The Upstream segment’s total capital 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 million in 2010 from€16,072 million in 2009, reflecting essentially the impact of higher hydrocarbon prices and production growth.

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 production ramp-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 (-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, reserve life was 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).

Total expenditures of the Upstream segment increased by 13% to 10,017 M€ in 2008 from 8,882 M€ in 2007. In 2008, expenditures mainly included the following projects: Kashagan in Kazakhstan; Akpo, Usan and OML 58 in Nigeria; Pazflor, Angola LNG and Tombua Landana in Angola; Ekofisk in Norway; the Mahakam zone in Indonesia; the Alwyn zone in the United Kingdom; Moho Bilondo in the Republic of Congo and Anguille in Gabon.

2007 vs. 2006

Upstream segment sales (excluding sales to other segments) were down 5% to 19,706 M€ in 2007 compared to 20,782 M€ in 2006, reflecting the impact of the decrease of the dollar compared to the euro, which more than offset the impacts of the increase in production and higher average hydrocarbon prices.

TOTAL’s average liquids price realization in 2007 increased 11% to $68.9/b from $61.80/b in 2006, in line with the increase in the average Brent price of oil, which was $72.4/b in 2007 compared to $65.10/b in 2006. TOTAL’s average gas price realization decreased 9% to $5.40/MBtu from $5.91/MBtu in 2006 due to weakness in the UK spot price as well as the ramp-up in production from the Dolphin project in the second half of 2007.

For 2007, adjusted net operating income for the Upstream segment increased 2% to 8,849 M€ compared to 8,709 M€ in 2006. The increase in adjusted net operating income was mainly due to the positive impacts of the more favorable environment (+0.75 B€) and growth (+0.6 B€) which were for the most part offset by the negative impacts of the weaker dollar (-0.65 B€), higher production costs (-0.3 B€ ) and increased exploration expense (-0.25 B€).

The exclusion of special items (which in 2007 comprised principally asset impairments of 93 M€ largely offset by capital gains of 89 M€) had a positive impact of 12 M€ on adjusted net operating income for the Upstream segment in 2007 and a negative impact of 45 M€ in 2006 (comprised of capital gains on asset disposals).

ROACE for the Upstream segment was down slightly to 34% in 2007 from 35% in 2006 because the average level of capital employed increased slightly more than adjusted net operating income as a result of the increased investment program to support future growth.

In 2007, Upstream net operating income in 2010 amounted to 8,837 M€8,852 million (for 2006, 8,754 M2009,€)6,218 million) from operating income of 19,503 M€17,450 million (for 2006, 20,307 M2009,€)12,858 million), with the difference between net operating income and operating income resulting primarily from taxes on net operating income of 11,996 M€ (12,764 M10,131 million (for 2009,€ in 2006)7,486 million), partially offset by income from equity affiliates and other items of 1,330 M€ (1,211 M1,533 million (for 2009,€ in 2006)846 million). The decreaseincrease in taxesnet operating income in 20072010 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 million compared to€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 were $16.6/boe in 2010, compared to $15.4/boe in 2009, 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 2010, the exclusion of special items (comprised principally of capital gains on asset sales partially offset by asset impairments) had a relative increasenegative impact of€255 million on adjusted net operating income for the Upstream segment compared to a positive impact of€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 million in 2010 from€9,855 million in 2009. The capital expenditures in 2010 mainly included projects in the sharefollowing countries: Angola, the United States, Nigeria, Canada, Norway, Kazakhstan, Australia, the United Kingdom, Indonesia, the Republic of the Group’s productionCongo, Libya, Gabon and Thailand.

ROACE for the Upstream segment increased to 21% in countries with lower tax rates.

Oil and gas production2010 from 18% in 2007 averaged 2,391 kboe/d compared to 2,356 kboe/d in 2006. This 1.5%2009. The increase was mainly due to the positive impact of underlying production growth (+5%, primarily from production ramp-ups and start-ups of major TOTAL-operated projects, including Dalia, Rosa and Dolphin), partially offset by the negative impacts of the price effect, OPEC quota reductions and shutdowns in the Niger delta because of security issues (-2%), of changes in the Group’s portfolio, mainly the termination of a concession in Dubai (-1%), and of the May 2007 fire on the Nkossa platform in Congo (-0.5%).

The Group’s proved reserves at December 31, 2007 decreased 6% to 10,449 Mboe from 11,120 Mboe at December 31, 2006. At the 2007 average rate of production, these reserves represent approximately 12 years of production. Changes in 2007 proved reserves were primarilyadjusted net operating income having increased, principally due to the sale of 16.7% of Sincor to PDVSAincreased hydrocarbon prices and other divestments (-4%), the price effect (-2%) and production over the year 2007 (-1.5%), which were only partially offset by new additions from successful exploration and business developments (+2%).

See “Item 4. Information on the Company — Exploration & Production — Reserves” for a table showing changes in proved reserves by year 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.

Total expenditures of the Upstream segment decreased by 1% to 8,882 M€ in 2007 from 9,001 M€ in 2006. In 2007, expenditures mainly included the following projects: Kashagan (Kazakhstan), Akpo (Nigeria), Yemen LNG (Yemen), Moho Bilondo (Congo), Dalia, Rosa, Tombua/Landana and Angola LNG (Angola), Snøhvit and Tyrihans (Norway), Dunbar and Jura (UK), Anguille (Gabon), Dolphin (Qatar), Surmont and Joslyn (Canada) and Tahiti (United States).production.


Downstream results

 

(M€)  2008 2007 2006   2011 2010 2009 

Non-Group sales

  135,524  119,212  113,887    141,907    123,245    100,518  

Operating income(a)

  826  4,824  3,372    1,694    982    2,237  

Equity in income (loss) of affiliates and other items

  (158) 284  384    401    141    169  

Tax on net operating income

  (143) (1,482) (1,125)   (409)   (201)   (633) 

Net operating income(a)

  525  3,626  2,631    1,686    922    1,773  

Adjustments affecting net operating income

  2,044  (1,091) 153    (603)   246    (820) 

Adjusted net operating income(b)

  2,569  2,535  2,784    1,083    1,168    953  

Investments

  2,418  1,875  1,775    1,870    2,343    2,771  

Divestments

  216  394  428    3,235    499    133  

ROACE

  20%  21%  23%    7%    8%    7%  

 

(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.

 

20082011 vs. 20072010

For the full year 2011, the Group’s European Refining Margin Indicator (ERMI) was $17.4/t, a decrease of 36% compared to 2010.

Downstream segment sales (excluding sales to other segments) increased 14% to 135,524 Mwere€141,907 million in 20082011 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 119,212 M€ in 2007.

In 2008, refined product sales averaged 3,658 kb/d, down 3% from 3,7743,776 kb/d in 2007. 2008 refinery2010. Refinery throughput decreased slightlyin 2011 was 1,863 kb/d, a 7% decrease compared to 2,362 kb/d from 2,4132,009 kb/d in 2007. The2010 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 for 2008 based on crude throughput was 88% (91% based on78% (83% for crude and other feedstock) compared to 87% (89% based on73% in 2010 (77% for crude and other feedstock) in 2007.. In 2008, six refineries were affected2010, the utilization rate was impacted by turnarounds compared to ten in 2007. The levelthe shutdown of the Dunkirk refinery turnarounds in 2009 is expected to be comparable toand a distillation unit at the 2008 level.

For 2008, adjusted net operating income for the Downstream segment increased 1% to 2,569 M€ compared to 2,535 M€ in 2007. This result mainly reflects the generally satisfactory environment, with gains in Europe (0.55 B€) in 2008 offset by losses in U.S. refining (-0.2 B€) stemming from the negative environment and from hurricanes,Normandy refinery as well as benefits recordedimpacts from increased productivity and supply optimization, particularly during the fourth quarter of 2008. However, net operating income was negatively affected by a 70% decreasestrikes in income from equity affiliates to 77 M€ in 2008 from 258 M€ in 2007, mainly due to losses incurred through TOTAL’s participation in Wepec, its Chinese refining affiliate.

The adjustment for the inventory valuation effect had a positive impact on Downstream adjusted net operating

income of 1,971 M€ in 2008 compared to a negative impact of 1,098 M€ in 2007. In 2008, the exclusion of special items (relating principally to restructuring charges of 70 M€ and other special items) had a positive impact of 73 M€ on adjusted net operating income. The exclusion of special items in 2007 had a negative impact of 7 M€, with capital gains of 101 M€ more than offsetting restructuring charges, asset impairments and other special items.

ROACE for the Downstream segment was 19.9% in 2008 compared to 20.6% in 2007 due principally to increased investment in 2008.France.

In 2008,2011, Downstream net operating income decreasedincreased to 525 M€1,686 million (for 2007, 3,626 M2010,€)922 million) from operating income of 826 M€1,694 million (for 2007, 4,824 M2010,€)982 million), with the difference between net operating income and operating income resulting primarily from taxes on net operating income of 143 M€409 million (for 2007, 1,482 M2010,€) and from the loss201 million), partially

offset by income from equity affiliates and other items of 158 M€401 million (for 2007,2010,€141 million). The increase in net operating income in 2011 compared to 2010 was due primarily to the impact of 284 M€).higher hydrocarbon prices, gains on asset sales and lower impairment charges.

Investments byThe 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 Downstream segment were 2,418 M€negative impact of the deterioration in 2008 compared to 1,875 M€refining margins in 2007.2011.

2007 vs. 2006

Downstream segment sales (excluding sales to other segments) increased to 119,212 M€ in 2007 compared to 113,887 M€ in 2006.

In 2007, refined product sales averaged 3,863 kb/d, up 2% from 3,786 kb/d in 2006.(1) 2007 refinery throughput decreased slightly to 2,413 kb/d from 2,454 kb/d in 2006. The refinery utilization rate for 2007 based on crude throughput was 87% (89% based on crude and


(1)These 2007 and 2006 refined product sales averages reflect a method of calculating volumes for the Port Arthur refinery adopted prior to 2008.

other feedstock) compared to 88% (91% based on crude and other feedstock) in 2006. In 2007, ten refineries were affected by turnarounds compared to three in 2006.

For 2007, adjustedAdjusted net operating income for the Downstream segment decreased 9% to 2,535 M€ compared to 2,784 M€ in 2006. The decrease was mainly due to the impact of a weaker dollar (-0.25 B€), as the negative impacts of higher maintenance activity (-0.11 B€), cost inflation (-0.07 B€)excludes any after-tax inventory valuation effect and the overall slightly negative environment (-0.04 B€) were offset by the positive effect of growth and productivity programs (+0.22 B€), notably the contribution from the Normandy distillate hydrocracker for a full year.

special items. The adjustment for the inventory valuation effect had a negative impact on Downstream adjusted net operating income in 2011 of 1,098 M€ in 2007859 million compared to a positivenegative impact of 327 M€640 million in 2006.2010. The exclusion of special items (comprised essentially of impairments on European refining assets (as described below), partially offset by gains on asset sales) in 20072011 had a negativepositive impact of 7 M€, with capital gains of 101 M€ more than offsetting restructuring

charges, asset impairments and other special items. In 2006, special items (relating to capital gains on the sale of certain non-strategic financial interests) had a negative impact of 174 M€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 21%7% in 20072011 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 million in 2006 due principally2009.

Refined product sales (including trading operations) were 3,776 kb/d in 2010, an increase of 4% compared to increased investment3,616 kb/d in 2007.2009. 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 2007,2010, Downstream net operating income increaseddecreased to 3,626 M€922 million (for 2006, 2,631 M2009,€)1,773 million) from operating income of 4,824 M€982 million (for 2006, 3,372 M2009,€)2,237 million), with the difference between net operating income and operating income resulting primarily from taxes on net operating income of 1,482 M€201 million (for 2006, 1,125 M2009,€)633 million), partially offset by income from equity affiliates and other items of 284 M€141 million (for 2006, 384 M2009,€)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 million compared to€953 million in 2009. The increase was 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 million compared to a negative impact of€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 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 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 million in operating income and€913 million in net operating income. These elements have been treated as adjustment items.

Investments by the Downstream segment were 1,875 M€2,343 million in 20072010, compared to€2,771 million in 2009.

ROACE for the Downstream segment was 8% in 2010 compared to 1,775 M€7% in 2006.2009.


Chemicals(1) results

 

(M€)  2008 2007 2006   2011 2010 2009 

Non-Group sales

  20,150  19,805  19,113    19,477    17,490    14,726  

Operating income(a)

  (58) 1,424  996    658    964    553  

Equity in income (loss) of affiliates and other items

  (34) (11) (298)   471    215    (58) 

Tax on net operating income

  76  (426) (191)   (225)   (267)   (92) 

Net operating income(a)

  (16) 987  507    904    912    403  

Adjustments affecting net operating income

  684  (140) 377    (129)   (55)   (131) 

Adjusted net operating income(b)

  668  847  884    775    857    272  

Investments

  1,074  911  995    847    641    631  

Divestments

  53  83  128    1,164    347    47  

ROACE

  9%  12%  13%    10%    12%    4%  

 

(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.

 

20082011 vs. 20072010

For the full year 2011, Chemicals segment sales, (excludingexcluding intra-Group sales, to other segments) increased by 2% to 20,150 Mwere€19,477 million, an increase of 11% compared to€17,490 million for 2010, reflecting essentially the globally favorable environment in 2008the first half 2011, which has since deteriorated.

In 2011, net operating income for the Chemicals segment was€904 million (for 2010,€912 million) from 19,805 Man operating income of€658 million (for 2010,€964 million), with the difference between net operating income and operating income resulting primarily from income from equity affiliates and other items of€471 million (for 2010, income of€215 million) offset by taxes on net operating income of€225 million (for 2010, a tax loss of€267 million). The decrease in 2007.2011 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 2011 was€775 million compared to€857 million in 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 division decreased from€393 million in 2010 to€373 million in 2011. Globally, for the full-year 2011, the Base Chemicals division benefited from ramp-ups in its activities in Qatar and South Korea, but suffered from deteriorating margins in 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 decreased by 21% to 668 M€ in 2008 from 847 M€ in 2007, due to the negative market environment faced by the Chemicals segment. In the first halfexcludes any after-tax inventory valuation effect and special items. The exclusion of 2008, the Chemicals segment was challenged by the rapid increase in oil prices, while in the second half of the year, despite benefiting from a rebound in margins, it suffered from falling demand linked to the worldwide economic downturn.

The adjustment for the inventory valuation effect had a negative impact on Chemicals adjusted net operating income of€10 million in 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 gains on asset sales. In 2010, the exclusion of special items had a positive impact on Chemicals adjusted net operating income of 504 M€58 million.

Investments by the Chemicals segment increased 32% to€847 million in 2011 compared to€641 million in 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, due essentially to a decrease in adjusted net operating income in 2011 compared to 2010.

2010 vs. 2009

For the full year 2010, Chemicals segment sales, excluding intra-Group sales, were€17,490 million, an increase of 19% compared to 2009.

In 2010, net operating income for the Chemicals segment was€912 million (for 2009,€403 million) from an operating income of€964 million (for 2009,€553 million), with the difference between net operating income and operating income resulting primarily from income from equity affiliates and other items of€215 million (for 2009, a loss of€58 million) offset by a loss from taxes on net operating income of€267 million (for 2009, a tax loss of€92 million).

The adjusted net operating income for the Chemicals segment in 2008,2010 was€857 million compared to€272 million in 2009. The adjusted net operating income for the Base Chemicals division increased by€377 million from 2009 to 2010, due to an improved environment and the ramp-up of new production units in Qatar. In 2010, the Specialties 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€113 million in 2010, compared to a negative impact of 201 M€254 million in 2007.2009. In 2008,2010, the exclusion of special items (relating principally to restructuring costs, asset impairment and other elements) had a positive impact of 180 M€on Chemicals adjusted net operating income.income of€58 million. In 2007,2009, the exclusion of special items (comprised primarily of restructuring charges,

asset impairments and other elements) had a positive impact of 61 M€on Chemicals adjusted net operating income.

ROACE for the Chemicals segment was 9.2% in 2008 compared to 12.1% in 2007 due principally to a decrease in adjusted net operating income.


(1)For 2006, pursuant to IFRS 5, income statement data and ROACE have been recalculated to exclude Arkema.

In 2008, net operating income amounted to a loss of 16 M€ (for 2007, a gain of 987 M€) from an operating loss of 58 M€ (for 2007, operating income of 1,424 M€), with the difference resulting primarily from losses from equity affiliates and other items of 34 M€ (for 2007, 11 M€), and gains on taxes on net operating income of 76 M€ (for 2007, a loss of 426 M€).123 million.

Investments by the Chemicals segment increased to 1,074 M€641 million in 20082010 compared to 911 M€631 million in 2007.

2007 vs. 2006

Chemicals segment sales (excluding sales to other segments) increased by 4% to 19,805 M€ in 2007 from 19,113 M€ in 2006.

Adjusted net operating income for the Chemicals segment decreased by 4% to 847 M€ in 2007 from 884 M€ in 2006, due principally to the negative impacts of the weaker dollar (-0.11 B€) and the petrochemicals environment (-0.07 B€), essentially linked to the weak margins in the fourth quarter 2007, which were only partially offset by the positive impact of growth and productivity programs (+0.15 B€).

The adjustment for the inventory valuation effect had a negative impact of 201 M€ on adjusted net operating income for the Chemicals segment in 2007, compared to a positive impact of 28 M€ in 2006. In 2007, the exclusion of special items (comprised of restructuring charges, asset impairments and other elements) had a positive impact of 61 M€ on adjusted net operating income. In 2006, the exclusion of special items (comprised mainly of restructuring charges and asset impairments) had a positive impact of 349 M€ on adjusted net operating income.2009.

ROACE for the Chemicals segment was 12% in 20072010 compared to 13%4% in 2006.

In 2007,2009 due principally to the significant increase in adjusted net operating income amounted to 987 M€ (for 2006, 507 M€) from operating income of 1,424 M€ (for 2006, 996 M€), with the difference resulting primarily from losses from equity affiliates and other items of 11 M€ (for 2006, a loss of 298 M€), as well as from taxes on net operating income of 426 M€ (for 2006, 191 M€).

Investments by the Chemicals segment decreased to 911 M€ in 2007 compared to 995 M€ in 2006.income.


 

Liquidity And Capital ResourcesLIQUIDITY 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  

 

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 90%) of TOTAL’s capital expenditures arein 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 and equity-method affiliates.subsidiaries. In the Upstream segment, as described in more detail under “Supplemental Oil and Gas Information (Unaudited) — Costs incurred”incurred in oil and gas property acquisition, exploration and development activities”, capital expenditures arein 2011 were principally development costs (approximately 80%50%, mainly for construction of new production facilities), exploration expenditures (successful or unsuccessful, approximately 8%5%) and acquisitions of proved and unproved properties (approximately 8%40%). In the Downstream segment, about 65%55% of capital expenditures arein 2011 were related to refining activities (essentially 55%70% for upgradingexisting units including maintenance and 45%major turnarounds and 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 upgrading unitsBase Chemicals (approximately 55%60%) and new constructionSpecialties Chemicals (approximately 45%40%).

For detailed information on expenditures by business segment, please refer to the discussion of CompanyTOTAL’s results for each segment above.

Expenditures (cashCash flow

Cash flow from operating activities was€19,536 million in 2011 compared to€18,493 million in 2010 and€12,360 million in 2009. The€1,043 million increase in cash flow from operating activities from 2010 to 2011 was due in part to higher net income (Group share), which increased by€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 2011, the Group’s working capital requirement increased by€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)activities was€15,963 million in 2011 compared to€11,957 million in 2010 and€10,268 million in 2009. 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 13,640 Munder development in 2011.

Total expenditures were€24,541 million in 2008,2011, up 16%51% from 11,722 M€16,273 million in 20072010, after decreasing 1%having increased 22% from 11,852 M€13,349 million in 2006.2009. During 2008, 73%2011, 88% of the expenditures were made by the Upstream segment 18%(as compared to 81% in 2010 and 74% in 2009), 8% by the Downstream segment (as compared to 14% in 2010 and 8% by the Chemicals segment. During 2007, 76% of the expenditures were made by the Upstream segment, 16% by the Downstream segment21% in 2009) and 8% by the Chemicals segment. During 2006, 76% of the expenditures were made by the Upstream segment, 15% by the Downstream segment, 8%3% by the Chemicals segment (as compared to 4% in 2010 and 1% by Corporate.5% in 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€8,578 million in 2011, compared to€4,316 million in 2010 and€3,081 million in 2009. 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 coatings resins businesses, of its interests in Total E&P Cameroun and of Sanofi shares. In 2010, the Group’s principal divestments were asset sales of€3,452 million, consisting mainly of Sanofi shares and the 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 million, consisting mainly of Sanofi shares.

Cash flow from operatingused in financing activities was 18,669 M€4,309 million in 20082011, compared to€3,348 million in 2010 and€2,868 million in 2009. The increase in cash flow used in financing activities in 2011 compared to 17,686 M€ in 2007 and 16,061 M€ in 2006. Cash flow from operating activities increased 983 M€€ from 2007 to 2008 despite a 2,591 M€€ decrease in net income (Group share) from 2007 to 2008


2010 was due primarily to sucha higher decrease being compensatedin current borrowings (€(3,870) million in 2011 compared to€(731) million in 2010), partly offset by a 2,571 Mhigher issuance of non-current financial debt (€ decrease4,069 million in the Group’s working capital requirement from 20072011 compared to 2008. Cash and cash equivalents increased to 12,321 M€ at year-end 20083,789 million in 2010) and an increase in current financial assets and liabilities (€896 million in 2011 compared to 5,988 M€ at year-end 2007(817) million in order to increase financial flexibility. Cash and cash equivalents were 2,493 M2010).

€Indebtedness at year-end 2006.

TOTAL’s non-current financial debt was 16,191 M€22,557 million at year-end 20082011 compared to 14,876 M€20,783 million at year-end 20072010 and 14,174 M€19,437 million at year-end 2006.2009. 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€14,025 million at year-end 2011 compared to€14,489 million at year-end 2010 and€11,662 million at year-end 2009.

Divestments, based on selling price and net of cash sold, were 2,585 M€ in 2008 compared to 1,556 M€ in 2007 and 2,278 M€ in 2006. In 2008, the Group’s principal divestments were asset sales of 1,451 M€, consisting mainly of Sanofi-Aventis shares, and reimbursements for carried investments in Yemen, Venezuela and Nigeria. In 2007, the Group sold certain Upstream assets in Canada, the UK and Norway and Downstream assets in the UK. The Group also sold 0.4% of the share capital of Sanofi-Aventis in the fourth quarter of 2007 for 316 M€. In 2006, the Group sold certain Upstream assets in the U.S. and in France, was reimbursed for carried investments on Akpo in Nigeria and sold certain non-strategic financial interests.Shareholders’ equity

Shareholders’ equity increased to 49,950 Mwas€69,389 million at December 31, 2008, from 45,700 M2011, compared to€61,271 million at December 31, 2007,year-end 2010 and 41,148 M€53,539 million at December 31, 2006.year-end 2009. Changes in shareholders’ equity in 20082011 were primarily due to the

addition of net income and translation adjustments, which waswere only partially offset by the payment of dividends, translation adjustments and share buybacks. During 2008, TOTAL repurchased 27.6 million of its own shares for 1,339 M€.dividends. Changes in shareholders’ equity in 20072010 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 and share buybacks. During 2007,adjustments. TOTAL repurchased 32.4 milliondid not repurchase any of its own shares for 1,787 M€. Changes to shareholders’ equity in 2006 were due primarily toduring the addition of net income, offset by the payment of the annual dividend, share buybacks, the spin-off of Arkemayears 2009, 2010 and translation adjustments. During 2006, TOTAL repurchased 75.9 million of its own shares for 3,975 M€.2011.

Net-debt-to-equity

As of December 31, 2008,2011, 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 23%, compared to 22% and 27% at year-ends 2010 and 34% at year-end 2007 and year-end 2006,2009, respectively. Over the 2006-20082009-2011 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, (financial short-term debt plus non-current debt less cash and cash equivalents), while higher net income increased shareholders’ equity and repurchases and cancellations of sharesdividends paid throughout the period decreased shareholders’ equity. As of December 31, 2008,2011, TOTAL S.A. had $8,966$10,139 million of long-term confirmed lines of credit, of which $8,725$10,096 million were unused.

In 2009,2012, based on the Group’s capital expenditures budget and after payment of dividends, the Company expects to maintain its net debt-to-equity ratio after payment of dividends in the targetedtarget range of around 25%20% to 30% in a $100 per barrel market environment. For information on the Group’s capital expenditures budget, please refer to the discussion in “— Overview”.


Guarantees and Other Off-balance Sheet Arrangements

GUARANTEES AND OTHER OFF-BALANCE SHEET ARRANGEMENTS

 

 

As part of certain project financing arrangements, Total S.A. has provided in 2008 guarantees for a maximum aggregate amount of 1.3 B€ in connection with the financing of the Yemen LNG project for an amount of€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 0.4 B€,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€2,463 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 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, currently have or are reasonably likely to have, currently or in the future, to have a material effect on the Group’s financial condition, changes in financial condition, revenues or expenses, results of operation, liquidity, capital expenditureexpenditures or capital resources.


Contractual ObligationsCONTRACTUAL OBLIGATIONS

 

 

Payment due by period (M€)  

Less
than

1 year

  1-3
years		  3-5
years		  

More
than

5 years

  Total  Less
than
1 year		   1-3
years		   3-5
years		   More
than
5 years		   Total 

Non-current debt obligations(a)

  —    6,578  6,486  1,967  15,031   —     8,052     5,069     7,308     20,429  

Current portion of non-current debt obligations(b)

  2,025  —    —    —    2,025   3,488     —     —     —     3,488  

Finance lease obligations(c)

  23  72  70  126  291   25     70     64     18     177  

Asset retirement obligations(d)

  154  357  296  3,693  4,500   272     469     335     5,808     6,884  

Operating lease obligations(c)

  429  549  374  675  2,027   762     968     651     940     3,321  

Purchase obligations(e)

  4,420  7,027  6,100  42,679  60,226   11,049     11,058     9,476     45,770     77,353  

Total

  7,051  14,583  13,326  49,140  84,100   15,596     20,617     15,595     59,844     111,652  

 

(a)Non-current debt obligations are included in the itemitems “Non-current financial debt” (“Hedgingand “Hedging instruments of non-current financial debt,” as presented in Note 20 to the Consolidated Financial Statements)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 268 M€.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 M€.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, 2008,2011, less the financial expense due on finance lease obligations for 70 M€.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.

Research and Development

RESEARCH AND DEVELOPMENT

 

 

In 2011, Research & Development (R&D) expenses amounted to€776 million, compared to€715 million in 2010 and€650 million in 2009. The process initiated in 2004 to increase R&D budgets continued in 2011. In addition, the Group set up in 2009 a structure to contribute to the development of start-ups that specialize in innovative energy technologies.

In 2011, 3,946 employees were dedicated to R&D, compared to 4,087 in 2010 and 4,016 in 2009. The reduction in 2011 can be explained, in particular, by the sale of part of the Specialty Chemicals’ Resins activity.

There are foursix major axes for research and developmentR&D focuses at TOTAL:

 

information ondeveloping knowledge, tools and understanding of energy resources, mainlytechnological mastery to discover and profitably operate complex oil and gas but alsoresources to help meet the global demand for energy;

developing and industrializing solar, biomass and next generation energies,carbon capture and storage technologies to optimize exploitation;help prepare for future energy needs;

competitiveness, renewaldeveloping practical, innovative and qualitycompetitive materials that meet customers’ specific needs, contribute to the emergence of products, including adaptingnew features and systems, enable current materials to market needs,be replaced by materials showing higher performance for users, and understandingaddress the challenges of improved energy efficiency, lower environmental impact and toxicity, better management of their life cycle and their environmental impacts;waste recovery;

efficiency,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 longevity of industrial production facilities, including theirsafety, achieve better energy efficiency; andefficiency, 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 issues relatedsafety, in conformity with existing regulation, and reduce the Group’s environmental footprint to water, air, soilachieve sustainability in its operations; and biodiversity at industrial sites,

mastering and the future of emissionsusing innovative technologies such as carbon dioxide.biotechnologies, materials sciences, nanotechnologies, high-performance computing, information and communications technologies and new analytic techniques.

ResearchThe Group intends to increase R&D in all of its business units through cross-functional themes and development costs amountedtechnologies. Attention is paid to 612 M€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 highly 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 2008 (or 0.34%Europe, the United States, Japan and China, as well as innovative small businesses, are part of sales), comparedthe Group’s approach.

Each business unit is actively developing its intellectual property policy in order to 594 M€ in 2007 (or 0.37% of sales)protect its innovations, to permit its activity to develop without constraints and 569 M€ in 2006 (or 0.37% of sales). The number of employees dedicated to research and development activities in 2008 was 4,285, compared to 4,216 in 2007 and 4,091 in 2006.facilite its partnerships. In 2011, more than 250 new patent applications were issued by the Group.


ITEM 6. DIRECTORS, SENIOR MANAGEMENT AND EMPLOYEES

Directors and Senior ManagementDIRECTORS 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 bylaws)by-laws).

In case of the resignation or death of a director between two shareholders’ meetings,Shareholders’ Meetings, the Board may temporarily appoint a replacement director. This appointment must be ratified by the next shareholders’ meeting.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 of Directors 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, 2008,2011, the Board of Directors has sixteen members. Of these,had fifteen members, including one director has been electedappointed by the shareholders to represent employee shareholders. Twelve of the members of the Board were independent.

The following individuals were members of the Board of Directors of TOTAL S.A. in 2008(information as of December 31, 2011(1).):

 

 

 

Christophe de Margerie

Born on August 6, 1951 (French).

Mr. de Margerie joined the Group after graduating from theÉcole Supérieure de Commerce in Paris in 1974. He served in several positions in the Group’s Finance Department and Exploration & Production division. In 1995, he was appointed President of Total Middle East. In May 1999, he joined the Executive Committee as President of the Exploration & Production 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 — Last renewal: May 15, 2009 until 2012.

Chairman of the Strategic Committee.

Holds 105,556 TOTAL shares and 53,869 shares of the “TOTAL ACTIONNARIAT FRANCE” collective investment fund.

Principal other directorships

•

Member of the Supervisory Board ofVivendi*

•

Manager ofCDM Patrimonial SARL

Thierry Desmarest

63 years old.Born on December 18, 1945 (French).

A graduate of theÉcole Polytechnique and a Miningan Engineer of the FrenchCorps des Mines, Mr. Desmarest served as Director of Mines and Geology in New Caledonia, then as technical advisor onat the staffsOffices 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 continues to servethen as Chairman of the Board of TOTAL.TOTAL until May 21, 2010. He was appointed Honorary Chairman and remains a director of TOTAL and Chairman of the TOTAL Foundation.

Director of TOTAL S.A. since 1995 and until 2010 (last— Last renewal: May 11, 2007).21, 2010 until 2013.

Chairman of the Nominating & Governance Committee, member of the Compensation Committee and the Strategic Committee.

Holds 385,576 shares.186,576 shares in full and 144,000 shares by usufruct.

Principal other directorships

 

Director of Sanofi-Aventis.*

Member of the Supervisory Board of Areva.*

• 

Director of Air Liquide.Sanofi*(2)

• 

Director of Renault SA.Air Liquide*

•

Director ofRenault S.A.*

•

Director ofRenault S.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.

A graduate from theÉcole Polytechnique, theÉcole 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 the Banque de France, before joining the Natixis Group as the head of the research department. He is an 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 theCercle des Economistes.

Director of Renault SAS.TOTAL S.A. since May 15, 2009 and until 2012.

Member of the Compensation Committee.

Holds 1,000 shares.

Principal other directorships

•

Director ofIPSOS


 

 

 

Patricia Barbizet

53 years old.Born on April 17, 1955 (French).

Independent director.

A graduate of theÉcole Supérieure de Commerceof Paris in 1976, Mrs.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. SinceIn 1992, she has been serving asbecame 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 the Director and Chief Executive Officer of Artémis. Since 2005, she has been thebecame Vice-President of

the PPR Board of Directors and Chairman of Christie’s.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, 200813, 2011 and until 2011.2014.

Chairperson of the Audit Committee and member of the Strategic Committee.

Holds 1,000 shares.

Principal other directorships

 

Vice-PresidentVice Chairman of PPR Board.*PPR* Board

Chief Executive Officer and Director of Artémis.mis

Chief Executive Officer (non-Director) of Financière Pinault

Director and Deputy Chief Executive Officer of Air France-KLM.*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 Bouygues.*Tawa Plc*

DirectorChairman of TF1.*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.
(1)UnderlinedInformation as of December 31, 2008.companies are companies excluded from the group in which the director has his or her main duties.

Daniel Boeuf

60 years old.

A graduate of theÉcole Supérieure des Sciences Économiques et Commerciales (ESSEC), Mr. Boeuf joined the Group in October 1973 and served in several sales positions before holding various operational positions in Refining & Marketing entities. He is currently responsible for training and skills management in specialties within the Refining & Marketing division. An elected member of the Supervisory Board of the TOTAL

ACTIONNARIAT FRANCE collective investment fund since 1999, he served as the Chairman of its Supervisory Board from 2003 to 2006.

Director of TOTAL S.A. representing employee shareholders since 2004 and until 2010 (last renewal: May 11, 2007).

Holds 3,964 TOTAL shares and 3,842 shares of the TOTAL ACTIONNARIAT FRANCE collective investment fund.


 

Daniel Bouton

58 years old.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 served

as the Chairman of the Société Générale group until May 12, 2008 and has been the Honorary Chairman since May 12, 2008.6, 2009.

Director of TOTAL S.A. since 1997 and until 2009 (last— Last renewal: May 12, 2006).15, 2009 until 2012.

Holds 3,200 shares.

Principal other directorships

 

Chairman of Société Générale.
•

Director ofVeolia Environnement*

Director of Veolia 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 Board ofInvestor 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

66 years old.Born on August 14, 1942 (French).

Independent director.

A graduate of theÉcole Polytechnique and a Mining Engineer,member of France’s engineeringCorps des Mines, Mr. Collomb held a number of positions within the Ministry of Industry and other staffcabinet 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 PresidentHonorary Chairman since 2007.

He is also PresidentChairman of theInstitut des Hautes EtudesÉtudes pour la Science et la Technologie (IHEST) and a Board member of theInstitut Français des Relations InternationalesEuropéen de la Technologie (IFRI).

Director of TOTAL S.A. since 2000 and until 2009 (last— Last renewal: May 12, 2006).15, 2009 until 2012.

Member of the Compensation Committee and the Nominating & Governance Committee.

Holds 4,712 shares.

Principal other directorships

 

Director of Lafarge.*Lafarge*

Director of DuPont* (United States).
•

Director ofDuPont* (United States)

•

Director ofAtco* (Canada)

Director of Atco* (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)

54 years old.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— Last renewal: May 16, 2008).13, 2011 until 2014.

Holds 2,000 ADRs (corresponding to 2,000 shares).

 

Principal other directorships

 

Chairman of the Board, and Co-Chief Executive Officer and Member of the Executive Committee of Power Corporation of Canada.*Canada*

ChairmanCo-Chairman of the Board and member of the Executive Committee and Member of the Board of Corporation Financière Power* (Canada).

Vice-ChairmanVice Chairman and Acting Managing Director of Pargesa Holding S.A.* (Switzerland).

MemberDirector and member of the BoardExecutive Committee of DirectorsLa 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).

MemberDirector of Great West Financial (Canada) Inc. (Canada)

Director and member of the Board of Directors and ExecutivePermanent 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 GDF Suez* (France).152245 Canada Inc. (Canada)

Director of Lafarge.*GWL&A Financial Inc. (United States)

Director of IGMGreat West Financial Inc.*(Nova Scotia) Co. (Canada).

Director of First Great-West Life & Annuity Insurance Company (United States)

Director of Power Corporation International.


Bertrand Jacquillat

64 years old.

A graduate ofÉcole des Hautes Études Commerciales (HEC),Institut d’études politiques de Paris and 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, and is a professor at theInstitut d’Études Politiques in Paris as well as Vice-President of theCercle des Economistes.

Communications Inc.

Director and Vice Chairman of TOTAL S.A. since 1996the Board of Power Corporation International

Director and until 2011 (last renewal: May 16, 2008).

Holds 3,600 shares.

Principal other directorships

Chairman and Chiefmember of the Executive OfficerCommittee of Associés en Finance.Putnam Investments LLC

Member of the Supervisory Board of Klépierre.*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 Presses Universitaires de France (PUF).Parjointco N.V.


 

 

 

Antoine Jeancourt-Galignani

71 years old.

Inspector of Finance, Mr. Jeancourt-Galignani held various positions within the Ministry of Finance before serving as Deputy Managing Director of Crédit Agricole from 1973 to 1979. He became Chief Executive Officer of Indosuez bank in 1979 before serving as its Chairman from 1988 to 1994. He then served as Chairman of Assurances Générales de France (AGF) from 1994 to 2001, before serving as Chairman of Gecina from 2001 to 2005, where he currently serves as a director.

Director of TOTAL S.A. since 1994 and until 2009 (last renewal: May 12, 2006).

Holds 5,440 shares.

Principal other directorships

Chairman of the Supervisory Board of Euro Disney SCA.*

Director of Gecina.*

Director of Kaufman & Broad S.A.*

Director of Société Générale.*

Member of the Supervisory Board of Oddo et Cie.


 

 

*Company names marked with an asterisk are publicly listed companies.
(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 5.4%5.5% of the Company’s shares and 5.4%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.

Anne Lauvergeon(1)Barbara Kux

49 years old.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.

Chief Mining Engineer and a graduate of theÉcole Normale Supérieure with 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. 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 2009 (last— Last renewal: May 12, 2006).15, 2009 until 2012.

Member of the Strategic Committee.

Holds 2,000 shares.

Principal other directorships

 

Chairperson of the Management Board of Areva.
•

Director ofGDF Suez*

•

Director ofVodafone Group Plc*

Chairperson and CEO of Areva NC.

Director of GDF Suez.*

Director of Vodafone Group Plc.*

Vice-President and Member of the Supervisory Board of Safran.*


 

 

 

Lord Peter Levene of PortsokenClaude Mandil

67 years old.

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 UK from 1984 to 1995. He then served as senior adviser at Morgan Stanley from 1996 to 1998 before becoming the 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)Born on January 9, 1942 (French).

Holds 2,000 shares.

Principal other directorships

Chairman of Lloyd’s.

Chairman of International Financial Services.

Chairman of General Dynamics UK Ltd.

Director of Haymarket Group Ltd.

Director of China Construction Bank.*


Claude Mandil

66 years old.Independent director.

A graduate of theÉcole Polytechnique and a General Mining Engineer from France’s engineering school Corps des Mines, Mr. Mandil served as a Mining Engineer in the Lorraine and Bretagne provinces.regions. He then served as a Project Manager at theDélégation de l’Aménagement du Territoire et de l’Action Régionale (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 then appointed Chief Executive Officer, then Chairman and Chief Executive Officer of theInstitutde Développement Industriel (Industry Development Institute)Institute — IDI) until 1988. He was Chief Executive Officer of theBureau de Recherches

ofBureau 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

Director of Institut Veolia Environnement.


 

 

 

 

*Company names marked with an asterisk are publicly listed companies.
(1)UnderlinedMs. Lauvergeon is Chairperson ofcompanies are companies excluded from the Management Board of Areva,group in which to the Company’s knowledge, owns 0.3% of the Company’s shares and 0.6% of the voting rights. Ms. Lauvergeon disclaims beneficial ownership of such shares.director has his or her main duties.

Christophe de Margerie

57 years old.

Mr. de Margerie joined the Group after graduating from theÉcole Supérieure de Commerce in Paris in 1974. He served in several positions in the Group’s Finance Department and Exploration & Production division. He became president of Total Middle East in 1995 before joining the Group’s executive committee as the President of the Exploration & Production division in May 1999. 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.

Director of TOTAL S.A. since May 12, 2006 and until 2009.

Holds 85,230 TOTAL shares and 39,330 shares of the TOTAL ACTIONNARIAT FRANCE collective investment fund.


Michel Pébereau(1)

66 years old.Born on January 23, 1942 (French).

Independent 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 Directors from 2003 to December 1, 2011, and is currently Honorary Chairman of BNP Paribas.

Director of TOTAL S.A. since 2000 and until 2009 (last— Last renewal: May 12, 2006).15, 2009 until 2012.

Chairman of the Compensation Committee and member of the Nominating & Governance Committee.

Holds 2,356 shares.

Principal other directorships

 

ChairmanDirector of BNP Paribas.*Paribas*

•

Director ofSaint-Gobain*

•

Director ofAXA*

•

Director ofEADS N.V.*

•

Director ofPargesa Holding S.A.* (Switzerland)

Director of Lafarge.*

Director of Saint-Gobain.*

Director of EADS N.V.*

Director of Pargesa Holding S.A.* (Switzerland).

Member of the Supervisory Board of AXA.*BNP Paribas Suisse

Member of the Supervisory Board of Banque marocaine pour le Commerce et l’Industrie.*l’Industrie*

• 

Non-voting member (Censeur) of the Supervisory Board of Galeries Lafayette.Lafayette


 

 

 

Thierry de Rudder(2)

59 years old.Born on September 3, 1949 (Belgian and French).

Independent director.

A graduate of theUniversité de Genève in mathematics, theUniversité Libre de Bruxelles and 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 2010 (last— Last renewal: May 11, 2007).21, 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.*Lambert*

Director of Compagnie Nationale à Portefeuille.*Brussels Securities (Belgium)

Director of GDF Suez.*GBL Treasury Center (Belgium)

Director of Suez-Tractebel.Sagerpar (Belgium)

Director of Imerys.*GBL Energy Sàrl (Luxembourg)

Director of Lafarge.*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.

 

*Company names marked with an asterisk are publicly listed companies.

(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 5.4%5.5% of the Company’s shares and 5.4%5.5% of the voting rights. Mr. Pébereau disclaims beneficial ownership of such shares.
(2)Mr. de Rudder is acting managing directorwas Acting Managing Director of Groupe Bruxelles Lambert which, acting in concert with Compagnie Nationale à Portefeuille and to the Company’s knowledge, owns 5.4%5.5% of the Company’s shares and 5.4%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 of 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.

Serge TchurukGérard Lamarche

71 years old.Born July 15, 1961 (Belgian).

A graduateIndependent director.

Mr. Lamarche 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 and Secretary of theÉcole Polytechnique Executive Committee (1995-1997), before taking part in the merger between Compagnie de Suez and anIngénieur de l’armementLyonnaise 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. Tchuruk held various management positions with Mobil Corporation, then with Rhône-Poulenc, whereLamarche pursued his career in industry by joining

NALCO (the American subsidiary of the Suez group and the world leader in the treatment of industrial water) as the Director and Chief Executive Officer. In March 2004, he was namedappointed Chief Executive Officer in 1983. He served as Chairmancharge of Finance of the Suez group, before being appointed Senior Executive and CEOVice President in charge of CDF-Chimie/Orkem from 1986 to 1990, then as ChairmanFinance and CEOmember of TOTAL from 1990 to 1995. In 1995, hethe Management Committee and the Executive Committee of the GDF Suez group in July 2008. On April 12, 2011, Mr. Lamarche became Chairman and Chief Executive Officer of Alcatel. In 2006,

he was appointed Chairman ofa Director on the Board of Alcatel-Lucent.Directors of Groupe Bruxelles Lambert (GBL). He has been the acting Managing Director since January 2012. Mr. Lamarche is also a Director of Legrand.

Director of TOTAL S.A. since 19892012 — Nomination by cooptation: January 12, 2012 until 2013.

Member of the Audit Committee and until 2010 (last renewal: May 11, 2007).the Strategic Committee.

Holds 61,0601,575 shares.

Principal other directorships

 

Acting Managing Director and Director of Thalès.*Groupe Bruxelles Lambert*

•

Director and member of the Audit Committee ofLegrand*


 

 

 

Pierre VaillaudOther information

73 years old.

A graduateThe Board noted the absence of potential conflicts between theÉcole Polytechnique, a Mining Engineer Directors’ duties in the best interests of the Company and a graduatethe private interests of its directors. To theÉcole Nationale Supérieure du Pétrole et des Moteurs, Mr. Vaillaud worked as an engineer with Technip and Atochem before joining TOTAL. He served as Chief Executive Officer Company’s knowledge, the members of TOTAL from 1989 to 1992, before becoming Chairman and Chief Executive Officer of Technip from 1992 to 1999, and of Elf Aquitaine from 1999 to 2000.

Directorthe Board of TOTAL S.A. since 2000are 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 TOTAL S.A. to one of its subsidiary and until 2009 (last renewal: May 12, 2006).

Holds 2,000 shares.

Principal other directorships

Memberproviding for special benefits upon termination of the Supervisory Board of Oddo et Cie.


Directors are elected for a three-year term of office, pursuant to Article 11 of the Company’s bylaws.

Other informationsuch 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)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: pursuant to Article L. 2323- 62 of the French Labor Code, members of the Worker’s Council attend, with consultative rights, all meetings of the Board. In compliance with the second paragraph of such article, since July 7, 2010, four members of 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 9, 2012, the Board of Directors, on the 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, 2011. At the Committee’s suggestion, the Board considered that, pursuant to the AFEP-MEDEF Code, a director is independent when “he or she has no relationship of any kind with the Company, its Group or 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 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 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 the 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.

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, Mandil, Pébereau and de Rudder were deemed to be independent directors.

80% of the directors 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 of Directors deemed that, for a company with a long-term activity and investment cycles of more than ten years, extended directorships and the corresponding experience represent an asset for the Group and a means of consolidating the independence of judgment of its Directors. The Board concluded that the proposal to renew the directorships 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 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 deemed to be independent directors.

General Management

At its meetingManagement form

Based on February 13, 2007,the recommendation by the Nominating & Governance Committee, the Board of Directors baseddecided at its meeting on the recommendation of the then existing Nominating & Compensation Committee(1), resolvedMay 21, 2010 to have separate individuals serve inreunify 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 TOTAL S.A. since May 21, 2010.

The Board of Directors deemed that the Company to ensure continuity during changesunified management form was the most appropriate to the Group’s management.business and specificities of the oil and gas sector. This decision was made taking into account the advantage of the unified management and the composition of 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, (COMEX)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.

The Management Committee (CODIR)equity or the notification of the Group facilitates coordination among the divisions and monitors the operating results and activity reportsBoard for investments exceeding 1% of these divisions.equity.

The Executive Committee

The following individuals were serving as members of the Executive Committee asAs of December 31, 2008:2011, the members of TOTAL’s Executive Committee were as follows:

 

Christophe de Margerie, Chairman of the COMEX (ChiefExecutive Committee (Chairman and Chief Executive Officer).;

François Cornélis, Vice-ChairmanVice Chairman of the COMEXExecutive Committee (President of the Chemicals division).;

Michel Bénézit (President of the Refining & Marketing division).;

Yves-Louis Darricarrère (President of the Exploration & Production division).;

Jean-Jacques Guilbaud (General Secretary).(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:

 

*Company names marked with an asterisk are publicly listed companies.

(1)

In February 2007, the then existing Nominating & Compensation Committee was separated into the existing Nominating & Governance Committee and the Compensation Committee (see “Item 6. Corporate Governance”).

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 different entities of the Group and monitors the operating results of the operational divisions and the activity reports of the functional divisions.

In addition to the members of the COMEX,Executive Committee, the following twenty-onetwenty-two individuals from various operating divisions and non-operating departments and operating divisions were servingserved as members of the Management Committee as of December 31, 2008(1):

Holding2011:

 

René Chappaz, Vice-President, Executive Career Management.

Yves-Marie Dalibard, Vice-President, Corporate Communications.

Jean-Michel Gires, Executive Vice-President, Sustainable Development and the Environment.

Peter Herbel, General Counsel.

Jean-Marc Jaubert, Senior Vice-President, Industrial Safety.

Jean-François Minster, Senior Vice-President, Scientific Development.

Jean-Jacques Mosconi, Vice-President, Strategic Planning.

François Viaud, Senior Vice-President, Human Resources.

Bruno Weymuller.

Upstream

Philippe Boisseau, President, Gas & Power.

Jacques Marraud des Grottes, Senior Vice-President, Africa, Exploration & Production.

Jean-Marie Masset, Senior Vice-President, Geosciences, Exploration & Production.

Charles Mattenet, Senior Vice-President, Asia and the Far East, Exploration & Production.

Patrick Pouyanné, Senior Vice-President, Strategy, Business Development and R&D, Exploration & Production.

Downstream

Pierre Barbé, Senior Vice-President, Trading & Shipping.

Alain Champeaux, Senior Vice-President, Overseas.

Alain Grémillet, General Secretrary, Refining & Marketing.

Eric de Menten, Senior Vice-President, Marketing Europe, Refining & Marketing.

André Tricoire, Senior Vice-President, Refining, Refining & Marketing.

Chemicals

Pierre-Christian Clout, Chairman and Chief Executive Officer of Hutchinson, Mapa-Spontex.

Françoise Leroy, General Secretary, Chemicals.

•

Corporate: René Chappaz, Peter Herbel, Jean-Marc Jaubert, Manoelle Lepoutre, Jean-François Minster, Jean-Jacques Mosconi, Jacques-Emmanuel Saulnier, François Viaud;

•

Upstream: Marc Blaizot, Philippe Boisseau, Arnaud Breuillac, Michel Hourcard, Jacques Marraud des Grottes;

•

Downstream: Pierre Barbé, Alain Champeaux, Bertrand Deroubaix, Eric de Menten, André Tricoire; and

•

Chemicals: Françoise Leroy, Jacques Maigné, Bernard Pinatel, Patrick Pouyanné.

In addition Charles Paris de Bollardière servesto 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 served as the Group’s Treasurer until January 1, 2012. Effective January 2, 2012, Humbert de Wendel is the Group’s Treasurer.

As of March 1, 2008, the Group modified its organization to include, notably, a Corporate Affairs Division containing several cross-functional departments.


 

CompensationCOMPENSATION

 

 

Board Compensation

The overall amount paidof directors’ fees allocated to members of the Board of Directors was set at€1.1 million for each fiscal year by the Shareholders’ Meeting on May 11, 2007.

In 2011, the overall amount of directors’ fees allocated to the members of the Board of Directors as directors’ fees was 0.83 M€ in 2008 in accordance with the decision of the shareholders’ meeting held on May 11, 2007. There1.07 million, noting that there were sixteenfifteen directors as of December 31, 2008, compared with fourteen2011, as of December 31, 2007.at year-end 2010.

Compensation was paidThe allocation of the overall amount of fees for 2011 remains based on an allocation scheme comprised of fixed compensation and variable compensation based on fixed amounts per meeting, which made it possible to take into account each director’s actual attendance at the membersmeetings of the Board of Directors in 2008 based onand its Committees.

To take into account the following principles, which remain unchanged from 2007:

A fixed amount of€20,000 was paid to each director (paid prorata temporis in case of a change during the period), apart from the Chairmancreation of the AuditStrategic Committee, who was paid€30,000 and the other Audit Committee members who were paid€25,000.


(1)In January 2009, Marc Blaizot and Bertrand Deroubaix succeeded Jean-Marie Masset and Alain Grémillet, respectively, as members of the Management Committee, and Bruno Weymuller resigned as a member of the Management Committee.

Each director was paid€5,000 for each meeting of the Board of Directors decided at its meeting of October 27, 2011, to set out the Audit Committee,allocation of fees and the fixed and variable amounts per meeting as follows:

•

a fixed amount of€20,000 is to be paid to each director (calculatedprorata temporis in case of a change during the period), apart from the Chairman of the Audit Committee, who is to be paid€30,000 and the other Audit Committee members, who are to be paid€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, or of the Nominating & Governance Committee attended. Thisor Strategic Committee meeting actually attended;

an amount was increased toof€7,000 per director for those directors who resideeach Audit Committee meeting actually attended;

a premium of€2,000 for travel from a country outside of France.France to attend a Board of Directors or Committee meeting;

Neither the Chairman of the Board, nor theand Chief Executive Officer receiveddoes not receive directors’ fees as directorsdirector 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 corporate 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 the Chief Executive 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 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.

Variable compensation is designed to reward short-term performance and progress towards medium-term objectives. The compensation 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 the 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 align 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 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 puts in place restrictions on the transfer of a portion of shares held upon the exercise of options and the definitive allocation of performance shares, applicable to the Chairman and the Chief Executive Officer until the end of their term of office.

The Chairman and the 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 are made public after the meeting of the Board of Directors that approves them.

Compensation of the Chairman and Chief Executive Officer

The compensation paid to Mr. de Margerie for his duties as Chairman and Chief Executive Officer was set by the Board of Directors of TOTAL S.A., 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, 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 a straight-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 were 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

•

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.

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 and assessed to what extent financial performance criteria had been met, the Board set the

 

(1)ExxonMobil, BP, Shell and Chevron.

variable portion payable to Mr. de Margerie in 2012 at€1,530,000 for his contribution in 2011, equivalent to 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 was€1,977,763, composed of a fixed base salary of€919,355 and a variable portion of€1,058,408 paid in 2011.

As Chairman and Chief Executive Officer, Mr. de Margerie has the use of a company 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 performance shares awarded to the Chairman and Chief Executive Officer” and “Chairman and the Chief Executive Officer’s compensation” below for additional compensation information.

Executive officer compensation

In 2011, the aggregate amount paid directly or indirectly by the French and foreign companies belonging to the Group of the Company as compensation to the executive officers of TOTAL COMPENSATION (INCLUDING IN-KIND BENEFITS) PAID TO EACH DIRECTOR IN THE YEAR INDICATEDin office at December 31, 2011 (members of the Management Committee and the Treasurer) as a group was€20.4 million (twenty-nine individuals), including€9 million paid to the six members of the Executive Committee. Variable compensation accounted for 42.4% of the aggregate amount of€20.4 million paid to executive officers.

Pensions and other commitments

 

(€)  2008  2007 

Thierry Desmarest

  (a) (a)

Christophe de Margerie

  (a) (a)

Patricia Barbizet(b)

  39,651  —   

Daniel Boeuf(c)

  173,910  170,124 

Daniel Bouton

  40,000  55,000 

Bertrand Collomb

  55,000  65,000 

Paul Desmarais Jr.

  48,000  41,000 

Bertrand Jacquillat

  90,000  90,000 

Antoine Jeancourt-Galignani

  95,000  90,000 

Anne Lauvergeon

  45,000  50,000 

Peter Levene of Portsoken

  41,000  55,000 

Maurice Lippens(d)

  —    21,177 

Claude Mandil(b)

  27,568  —   

Michel Pébereau

  70,000  70,000 

Thierry de Rudder

  116,000  109,000 

Serge Tchuruk(e)

  143,427  137,368 

Pierre Vaillaud(f)

  186,873  189,814 
1)Pursuant to applicable law, the Chairman and Chief Executive Officer is 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. He also participates in the internal defined
contribution pension plan and the defined benefit supplementary pension plan, known as RECOSUP, created by the Company. This supplementary pension plan, which is not limited to the Chairman and Chief Executive Officer, is described in 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).

As of December 31, 2011, Mr. de Margerie’s aggregate benefit entitlement under all of the above pension plans would amount to 22.31% of his gross annual compensation received in 2011 (2011 fixed base salary and variable portion for 2010, paid in 2011).

2)The Chairman and Chief Executive Officer participates 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 (€36,372 in 2012). Compensation above this amount does not qualify as pensionable compensation under either government-sponsored or contractual 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.

The plan provides participants with a pension equal to the sum of 1.8% of the 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). It is adjusted in line with changes in the value of the ARRCO pension point and strictly capped as described in point 1 above.

As of December 31, 2011, the Group’s pension obligations to Mr. de Margerie under the defined

benefit supplementary pension plan represented the equivalent of 18.01% of his gross annual compensation paid in 2011.

3)The Chairman and Chief Executive Officer is 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 the 12-month period preceding retirement. Pursuant to the provisions of Article L. 225-42-1 of the French Commercial Code, such benefit is subject to the performance conditions detailed in point 7 below.

This retirement benefit cannot be combined with the compensation for loss of office described in point 5 below.

4)The Chairman and Chief Executive Officer also participates 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 plan funded by the Company and open to the executive officers of the Group. Upon death, the plan guarantees a payment equal to two years’ gross compensation (fixed and variable portions), increased to three years upon accidental death, as well as, in the 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 the 12-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 cases 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 Article L. 225-42-1 of the French Commercial Code, this benefit is subject to the performance conditions detailed in 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 points 3 and 5 are subject to 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.

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 points 1 and 2
above made by the Company for directors for fiscal year 2011, the annual supplementary pension received by Mr. Desmarest in relation to his previous employment by the Group was approximately€562,354 (December 31, 2011 value), adjusted in line with changes in the value of the ARRCO pension point.

9)As of December 31, 2011, the total amount of the Group’s commitments under pension plans and similar for company officers is equal to€31.2 million.

Chairman and Chief Executive Officer Summary table at February 29, 2012Employment

contract

Retirement benefit and supplementary pension plansBenefits or advantages due or likely to be due upon termination or change of officeBenefits related to a non-compete agreement

Christophe de Margerie

Chairman and Chief Executive Officer

Start of the office: February 2007(a)

Term of current office:

The Shareholders’ Meeting called in 2012 to approve the financial statements for the year ending December 31, 2011

NO

YES

(retirement benefit)(b)

(internal defined supplementary pension plan(c) and corporate RECOSUP defined contribution pension plan(d) also applicable to certain Group employees)

YES

(compensation for loss of office)(e)

NO

 

(a)For the Chairman of the Board of Directors and the Chief Executive Officer see the summary tables “— Summary of compensation, stock optionssince February 13, 2007, and restricted shares granted to the Chairman and the Chief Executive Officer” and “—Compensation of the Chairman and the Chief Executive Officer”. Thierry Desmarest and Christophe de Margerie received no directors’ fees for their service on the Company’s Board of Directors.Officer since May 21, 2010.
(b)Appointed as a directorPayment 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 16, 2008.15, 2009 and May 21, 2010. Details 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 below.
(c)IncludingRepresenting an annual pension that would be equivalent, as of December 31, 2011, to 18.01% of the annual compensation received by Mr. Boeuf as an employee of Total Raffinage Marketing, a subsidiary of TOTAL S.A., which amounted to€115,123.88 in 2007 and€123,910.48 in 2008.for 2011.
(d)TermMr. de Margerie’s pension benefit represented a booked expense of office expired on May 11, 2007.€2,121 for fiscal year 2011.
(e)Including pension payments relatedPayment subject to previous employmentperformance 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 performance share grants policy

General policy

Stock options and performance share grants put in place by TOTAL S.A. concern only TOTAL shares. No options for or grants of performance shares of any of the Group’s listed subsidiaries are awarded by TOTAL S.A.

All grants 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 performance shares awarded to each beneficiary. The Board of Directors then gives final approval for this 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 discount. 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 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. However, for the 2007 to 2011 option plans, options awarded to beneficiaries employed by non-French subsidiaries at the grant date can be converted to bearer form or transferred after the 2-year vesting period at 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 presence condition and a performance condition based on the return on equity (ROE) of the Group. At the end of this vesting period, and provided that the conditions set are satisfied, the performance 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 employed by non-French subsidiaries on the grant date, the vesting period for performance shares

may be increased to four years; in such cases, there would be no mandatory holding period. As of 2011, all performance shares granted to executive officers are subject to performance conditions.

The grant of these options or performance shares is used to extend, based upon individual performance assessments at the time of each plan, the Group-wide policy of developing employee shareholding (for further information, see “— Employees and Share Ownership — Arrangements for involving employees in the Company’s share capital” below).

Stock options and performance share grants to the Chairman and Chief Executive Officer are subject to specific performance conditions set out below.

Grants to the Chairman and Chief Executive Officer

The Chairman and Chief Executive 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, the Board of Directors decided that, for the 2007 to 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) are 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 holds a number of shares (directly or through collective investment funds invested in Company stock) corresponding to more than five times his 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.

As of 2011, the Chairman and Chief Executive Officer receives performance share grants, the final awarding of which is subject to a presence condition and performance conditions.

On the September 14, 2011 grant of TOTAL performance shares, the Board of Directors decided that the Chairman and Chief Executive Officer will have to hold for as long as he remains in office, 50% of the capital 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 future 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 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 to date, and on the shares he holds.

2011 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 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 which amountedbased 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%.

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%.

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: The Board of Directors decided 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):

–

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;

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 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%.

2009 share subscription option plan:The Board of Directors decided that, provided the presence condition within the Group was met, 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 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%.

The acquisition rate applicable to the subscription options that were subject to the performance condition of the 2009 Plan was 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 PERFORMANCE SHARES AWARDED TO THE CHAIRMAN AND CHIEF EXECUTIVE OFFICER

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)Compensation detailed in the following table. For the 2010 fiscal year, Mr. de Margerie received compensation of€72,3681,030,359 as Chief Executive Officer for the period from January 1 to May 21, 2010, and compensation of€1,977,763 as Chairman and Chief Executive Officer for the period from May 22 to December 31, 2010.
(b)Mr. de Margerie has the use of a company 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 20072011 are detailed in the table “Stock options awarded in 2011 to the Chairman and 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 Statements).
(d)The value of performance shares was calculated on the day when they were awarded.

CHAIRMAN AND CHIEF EXECUTIVE OFFICER’S COMPENSATION

    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)Variable portion paid for prior fiscal year. For more detailed information about these criteria, see “— Compensation of the Chairman and Chief Executive Officer”.
(b)Includes a fixed portion of€507,097 for the period between January 1 and May 21, 2010 and€73,427 in 2008.919,355 for the period between May 22 and December 31, 2010.
(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 have been substantially fulfilled.
(d)Including a variable portion of€523,262 for the period between January 1 to May 21 2010, and€1,058,408 for the period between May 22 and December 31, 2010.
(e)Mr. de Margerie has the use of a company 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”).

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, 1st and 2nd paragraphs):

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)For the Chairman and Chief Executive Officer, see the summary compensation tables “Summary of compensation, stock options and performance shares awarded to the Chairman and Chief Executive Officer” and “Chairman and Chief Executive Officer’s compensation”. The Chairman and Chief Executive Officer did not receive any directors’ fees.
(c)Member of the Compensation Committee since May 21, 2010.
(d)Including for 2011, fees received (€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 Board of Directors up to May 21, 2010 (€751,407), the retirement benefit (€492,963) and pension benefits received (€320,341).
(e)Director since May 21, 2010.
(f)Including pension payments related to previous employment byfor 2011, the Group, which amounted todirectors’ fees received, representing€139,814 in 2007 and58,500, as well as the compensation received from Total Raffinage Marketing (a subsidiary of TOTAL S.A.), representing€141,873 in 2008.97,865 and including for 2010, directors’ fees received, representing€32,328 as well as the compensation received from Total Raffinage Marketing, representing€95,601.
(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 13, 2011.

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. Daniel Boeuf,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 theand Chief Executive Officer and Messrs. Boeuf, TchurukDesmarest and Vaillaud)Clément) consists solely of directors’ fees (gross amount) paid during the relevant period. None of the Directors of TOTAL S.A.directors have service contracts whichlinking them to TOTAL S.A. or any of its subsidiaries that provide for benefits upon termination of employment.

Compensation of the ChairmanSTOCK OPTIONS AWARDED IN 2011 TO THE CHAIRMAN AND CHIEF EXECUTIVE OFFICER

The total gross compensation paid to Mr. Thierry Desmarest for fiscal 2008 was set by the Board of Directors, based upon the proposal of the Compensation Committee. This compensation is composed of a fixed base salary of€1,100,000 and a variable portion.

The variable portion is calculated by taking into account the Group’s return on equity, the Group’s earnings compared to those of other major international oil companies, as well as the Chairman’s personal contribution to the Group’s 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 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 in 2009 for his contribution in 2008 amounted to€969,430.

The total gross compensation paid to the Chairman for fiscal year 2008 amounted to€2,069,430.

Mr. Desmarest does not receive any in-kind benefits.


See the tables “Summary of Compensation, Stock Options and Restricted Shares Grantedstock options awarded to the Chairman and the Chief Executive Officer” and “Compensation of the Chairman and the Chief Executive Officer” below for additional compensation information.

Compensation of the Chief Executive Officer

The total gross compensation paid to Mr. Christophe de Margerie for fiscal 2008 was set by the Board of Directors, based upon the proposal of the Compensation Committee. This compensation is composed of a fixed base salary of€1,250,000 and a variable portion.

The variable portion is calculated by taking into account the Group’s return on equity, the Group’s earnings compared to those of other major international oil companies, 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, which limit may be increased to 165% to reward exceptional performance. The objectives related to personal contribution were considered to be 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 Chief Executive Officer are detailed in 2009 for his contribution in 2008 amountedthe table “TOTAL stock options awarded to€1,552,875.

The total gross compensation paid to the Mr. de Margerie, Chairman and Chief Executive Officer for fiscal year 2008 amountedof 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)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 Statements).
(b)As part of the share subscription option plan awarded on September 14, 2011, the Board of Directors decided that, for the Chairman and Chief Executive Officer, the number of share subscription options that are likely to be exercised at the end of the two-year vesting period will be subject to performance conditions being met (see “— Grants to the Chairman and Chief Executive Officer”).

€2,802,875.STOCK OPTIONS EXERCISED IN 2011 BY THE CHAIRMAN AND CHIEF EXECUTIVE OFFICER

Mr. Christophe de Margerie has the use of a company car.

See the tables “Summary of Compensation, Stock Options and Restricted Shares GrantedThe stock options awarded to the Chairman and the Chief Executive Officer” and “Compensation ofOfficer are detailed in the table “TOTAL stock options awarded to Mr. de Margerie, Chairman and the Chief Executive Officer” below for additional compensation information.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       

Executive Officer CompensationPERFORMANCE SHARES AWARDED IN 2011 TO THE CHAIRMAN AND

In 2008, the aggregate amount paid directly or indirectly by the French and foreign affiliates of the Company as compensation to the executive officers of TOTAL in office as of December 31, 2008 (twenty-eight individuals, members of the Management Committee and the Treasurer) as a group was 18.0 M€, including 7.4 M€ paid to the six members of the Executive Committee. Variable compensation accounted for 44.2% of the aggregate amount of 18.0 M€ paid to executive officers.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.

Pensions and other commitmentsPERFORMANCE SHARES FINALLY AWARDED IN 2011 FOR THE CHAIRMAN AND CHIEF EXECUTIVE OFFICER OR ANY DIRECTOR

 

1)The Chairman and the Chief Executive Officer, pursuant to applicable law, are eligible for French social security benefits, ARRCO (French Association for Complementary Pension Schemes) and AGIRC (French executive pension scheme federation) complementary pensions, defined benefit pension plans (RECOSUP) and the supplementary pension plan created by the Company. This supplementary pension plan, which is not limited to the Chairman and the Chief Executive Officer, is described in more detail below.

2)The Chairman and the Chief Executive Officer are eligible for a supplementary pension plan open to all employees of the Group whose annual compensation is greater than the annual French social security threshold multiplied by eight.

This supplementary pension plan is financed and managed by TOTAL S.A. to award a pension that is based on the period of employment (up to a limit of 20 years) and the portion of annual gross compensation (including fixed and variable portions) that exceeds by at least eight times the annual French social security threshold. This pension is indexed to the French Association for Complementary Pensions Schemes (ARRCO) index.

As of December 31, 2008, the Group’s supplementary pension obligations related to the Chairman are the equivalent of an annual pension of 23.8% of the Chairman’s 2008 compensation.

For the Chief Executive Officer, the Group’s pension obligations are, as of December 31, 2008, the equivalent of an annual pension of 18.9% of his 2008 compensation.

3)The Company also funds a life insurance policy which guarantees a payment, upon death, equal to two years’ compensation (both fixed and variable), increased to three years upon accidental death, as well as, in case of disability, a payment proportional to the degree of disability.

4)The Chairman and the Chief Executive Officer are also entitled to retirement benefits equal to those available to eligible members of the Group under the French National Collective Bargaining Agreement for the Petroleum Industry, amounting to 25% of the annual gross compensation (including fixed and variable portions) paid in the 12-month period preceding the retirement of the Chairman or the Chief Executive Officer, as the case may be.

5)If the Chairman or the Chief Executive Officer’s employment is terminated or his term of office is not renewed, he is eligible for severance benefits equal to two times an individual’s annual pay, based upon the gross compensation (both fixed and variable) paid in the 12-month period preceding termination of employment or term of office.

The severance benefits to be paid upon a change of control or a change of strategy of the Company are cancelled in the case of gross negligence or wilful misconduct or if the Chairman or the 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.

Since Mr. Desmarest is eligible to claim his full retirement benefits, these provisions are only relevant to Mr. de Margerie.

6)The commitments related to the supplementary pension plan, retirement benefits and severance benefits upon termination of employment or term of office will be subject to the procedure for regulated agreements set forth in article L. 225-38 of the French Commercial Code.

7)Pursuant to the provisions to the French law of August 21, 2007, which modifies article L. 225-42-1 of the French Commercial Code, the commitments described above related to retirement benefits and severance benefits upon termination of employment or term of office are subject to performance conditions.

These performance conditions are deemed to be met if at least two of the three following 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%.

The Company’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 of the four following companies: ExxonMobil, Shell, BP and Chevron.

8)In addition, the Company has the following pension commitments (described in paragraph 2, above), as defined under French law, to Messrs. Tchuruk and Vaillaud:

The Company has funded a supplementary pension for Mr. Tchuruk related to his previous employment by the Group. Mr. Tchuruk receives an annual supplementary pension of approximately€73,427, based upon calculations as of December 31, 2008. This pension is indexed to the ARRCO index.

The Company has funded a supplementary pension for Mr. Vaillaud related to his previous employment by the Group. Mr. Vaillaud receives an annual supplementary pension of approximately€141,873, based upon calculations as of December 31, 2008. This pension is indexed to the ARRCO index.

9)For the year 2008, the total amount of the Group’s pension commitments related to the directors of the Group is equal to 25.8 M€.

Summary table

as of February 28, 2009

  Employment
contractDate of Plan		  

Benefits or advantages
due or likely to be due
upon termination or
changeNumber of officeshares

finally awarded during
fiscal year

   Benefits relatedAcquisition
to a non-compete
agreementcondition		 Benefits or advantages
due or likely to be
due after
termination or
change of office

Thierry Desmarest

Chairman of the Board of Directors

Member of the Board since May 1995(a)

Expiry of current term of office:
The shareholders’ meeting called in 2010 to approve the financial statements for the year ending December 31, 2009

NONONO

YES

(retirement benefit)(b) (supplementary pension plan also applicable to some Group employees)

Christophe de Margerie

2009 Plan——

Chairman and Chief Executive Officer

09/15/2009

MemberClaude Clément

2009 Plan—

Director representing employee shareholders

09/15/2009—

Total

——

TOTAL STOCK OPTION GRANTS

The following table gives a breakdown of stock options awarded by category of beneficiaries (main executive officers, other executive officers and other employees) for the plans in effect during 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)To take into account the spin-off of Arkema, pursuant to 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 TOTAL stock 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 the four-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 the four-for-one stock split.
(b)Certain employees of the Elf Aquitaine group in 1998 also benefited 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 not been a member of the Management Committee since February 14, 2007. Mr. Desmarest was awarded 110,000 options under the 2007

Expiry Plan and no options since 2008.

(d)The options are exercisable, subject to a presence condition, after a 2-year vesting period from the date of current termthe Board meeting awarding the options and expire eight years after this date. The underlying shares may not be transferred during the 4-year period from the date of office:
the Board meeting awarding the options (except for the 2008 Plan). The shareholders’presence condition states that the termination of the employment contract will result in the employee losing the right to exercise the options.
(e)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.
(f)For the 2008 Plan, the options acquisition rate, linked to the performance condition, was 60%.
(g)For the 2009 Plan, the options acquisition rate, linked to the performance condition, was 100%.

TOTAL STOCK OPTIONS 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		     

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)The grant date is the date of the Board meeting calledawarding 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 the four-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 at its meeting on March 14, 2006, pursuant to 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.
(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 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.
(g)The acquisition rate applicable to the subscription options that were subject to the performance condition of the 2009 Plan was 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 (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 2011 and has not been awarded any share subscription options under the 2011 Plan.

TOTAL STOCK OPTIONS AWARDED TO MR. DE MARGERIE, CHAIRMAN AND

CHIEF EXECUTIVE OFFICER OF TOTAL S.A.

   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)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 (chapter 9).
(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 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, 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, was not awarded any share subscription options under the 2008, 2009, 2010 and 2011 plans. In addition, he was not awarded any performance shares under plans in the period 2005 to 2011.

(1)Out of a total potential share capital of 2,408,400,225 shares.

STOCK OPTIONS AWARDED TO THE TEN EMPLOYEES (OTHER THAN CORPORATE EXECUTIVE OFFICERS) RECEIVING THE LARGEST AWARDS/STOCK OPTIONS EXERCISED BY THE TEN EMPLOYEES (OTHER THAN CORPORATE EXECUTIVE OFFICERS) EXERCISING THE LARGEST NUMBER OF OPTIONS

    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)The grant date is the date of the Board meeting awarding the options.
(b)Exercise price as of May 24, 2006. The exercise prices of TOTAL stock options 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.
(c)Weighted-average price.

TOTAL GLOBAL FREE AND PERFORMANCE SHARE GRANTS

TOTAL global free share plan

In addition to the performance 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 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. Following the vesting period, the shares will be issued.

Breakdown of TOTAL performance share grants

The following table gives a breakdown of TOTAL performance share grants by category of beneficiary (main executive officers, other executive officers and other employees).

      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)The number of performance shares awarded shown in this table has not been adjusted to take into account the four-for-one stock split approved by the Shareholders’ Meeting on May 12, 2006.
(b)For the 2005, 2006, 2007 and 2009 Plans, the acquisition rates of the shares awarded, linked to the performance conditions, were 100%. For the 2008 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 performance shares. The Chairman of the Board and the Chief Executive Officer were not awarded any 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 performance shares under the 2005 Plan, 200 performance shares under the 2007 Plan, 500 performance shares under the 2008 Plan, 240 performance shares under the 2010 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 performance shares, which were bought back by the Company on the market, will become final after a 2-year vesting period. This final grant is subject to a presence condition and a performance condition (see “— Stock options and performance share grants policy — General policy”). Moreover, the transfer of the performance shares will not be permitted until the end of a 2-year mandatory holding period.

PERFORMANCE SHARE PLANS AS OF DECEMBER 31, 2011

    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)The number of performance shares awarded has been multiplied by four to take into account the four-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 performance share grant, except for the performance shares awarded on October 9, 2008, approved by the Board on September 9, 2008.
(c)To take into account the four-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, and Mr. de Margerie, Chief Executive Officer since February 13, 2007 and Chairman and Chief Executive Officer 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 performance shares under the 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. In addition, Mr. Boeuf, director of TOTAL S.A. representing employee shareholders until December 31, 2009, was awarded performance 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 performance 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 performance shares under the plan approved by the Board of Directors of TOTAL S.A. on September 14, 2011. In addition, Mr. Clément was awarded 240 performance shares under the plan approved by the Board of Directors of TOTAL S.A. on September 14, 2010.
(e)NOEmployees of TOTAL S.A., or of any Group company, who were not directors of TOTAL S.A. as of the date of grant.
(f)For the 2010 Plan, final grants following the death of the beneficiary.
(g)Performance shares finally awarded for which the entitlement right had been canceled erroneously.

In case of a final grant of the outstanding performance shares as of December 31, 2011, the corresponding shares would represent 0.27%(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.

FOLLOW-UP OF THE GLOBAL FREE SHARE PLAN

    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)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, 2011, the corresponding shares would represent 0.10%(1) of the Company’s potential share capital as of such date.

PERFORMANCE SHARE GRANTS TO THE TEN EMPLOYEES (OTHER THAN CORPORATE EXECUTIVE OFFICERS) RECEIVING THE LARGEST NUMBER OF PERFORMANCE SHARES

  YESNumber of
performance shares
granted/finally
awarded

(termination benefit

 Grant dateDate of
final grant
(end of
vesting
period)		End of
mandatory
holding
period

)Performance share grants approved by the Board meeting on September 14, 2011 to the ten TOTAL S.A. employees (other than corporate executive officers) receiving the largest number of performance shares(b)(a)

  NO91,400 

YES

09/14/201109/15/201309/15/2015

(retirement benefit)(b) (supplementary pensionPerformance shares finally awarded in 2011 following the performance share plan also applicableapproved by the Board meeting on September 15, 2009, to some Group employees)the ten employees (other than corporate executive officers) at the time of such approval receiving the largest number of performance shares(b)

20,00009/15/200909/16/201109/16/2013

 

(a)ChairmanGrant approved by the Board on September 14, 2011. Grants of these performance shares will become final, subject to a performance condition, after a 2-year vesting period (i.e., on September 15, 2013) (see “— Stock options and Chief Executive Officer until February 13, 2007, and Chairmanperformance share grants policy — General policy”). Moreover, the transfer of the Boardperformance shares will not be permitted until the end of Directors from February 14, 2007.a 2-year mandatory holding period (i.e., on September 15, 2015).
(b)PaymentThis final grant is subject to a performance condition in accordance with the decision(see “— Stock options and performance share grants policy — General policy”). The acquisition rate of the Boardshares awarded, linked to the performance condition, was 100%. Moreover, the transfer of Directors on February 11, 2009.the performance shares finally awarded will only be permitted after the end of a 2-year mandatory holding period (i.e., from September 16, 2013).

(1)Out of a total potential share capital of 2,408,400,225 shares.

Corporate GovernanceCORPORATE 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 in 2008 by the principal French business confederations, theAssociation Française des Entreprises Privées (AFEP) and theMouvement des Entreprises de France (MEDEF) (the “AFEP-MEDEF(“AFEP-MEDEF Code”) as its reference for corporate governance matters.

The Company’s corporate governance practices differ from the recommendations contained in the AFEP-MEDEF Code onwas amended in April 2010 to make recommendations related to the following limited matters:

balanced number of men and women sitting in Board and Committees’ meetings. The AFEP-MEDEF Codecode recommends that a director no longertarget of at least 20% of women be considered as independent uponreached before April 2013 and at least 40% before April 2016. These requirements were also stipulated in the expiryFrench 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, 2011, the Company’s Board of Directors was comprised of four women out of a total of fifteen members (i.e., 26%). At the Shareholders’ Meeting in May 2012, it will be proposed to appoint one additional woman to replace one director whose term is coming to an end. If the resolution is approved by the Shareholders’ Meeting, the proportion of office during which the length of his servicewomen sitting on the board reaches 12 years.Board will be one-third. The Board has not followed this recommendationof Directors will keep examining corporate governance issues to keep diversifying in regardsthe years to one ofcome.

At its members,meeting on February 8, 2012, the Nominating & Governance Committee examined current practices in considerationthe Company in view of the experienceAFEP-MEDEF code and authorityconcluded that the Company complied with almost all the recommendations.

Mr. Thierry Desmarest, Honorary Chairman of which thisthe Company and director, is in possession, which reinforce

his independence and contribute to the Board’s work.

The Chairmancan still be entrusted with representative missions for the Group, by decision of the Board of Directors chairs the Nominating & Governance Committee of the Board. The Board of Directors and this Committee consider that the participation of the Chairman on the Nominating & Governance Committee enables the Committee to benefit from his experience and his knowledge of the Company’s activities, environment and executive teams, which is particularly useful to inform the Committee’s deliberations concerning the appointment of executives and directors. The fact that the Chairman of the Board, who does not exercise executive duties, chairs the committee permits close collaboration between the Board and the Committee, the latter being responsible for the review of the Board’s workings and corporate governance matters. 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.


Pursuant to the AFEP-MEDEF Code, on February 11, 2009, the Board of Directors noted that, effective from the same day, the employment contracts of its Chairman and its Chief Executive Officer had been terminated.May 21, 2010.

Since 2004, the Board of Directors has had a financial codeFinancial Code of ethicsEthics 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 Procedureprocedure of the Board of Directors

At its meeting on February 13, 2007, the Board of Directors adopted Rulesrules of Procedureprocedure to replace the Directors’ Charter and to take into account the separation of the positions of Chairman of the Board and Chief Executive Officer implemented at the same meeting.Charter.

The Board’s Rulesrules of Procedureprocedure 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 principalmission 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 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 coveredfalling 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)In these rules of procedure, TOTAL S.A. is referred to as the “Company” and, collectively with all of its direct and indirect subsidiaries, as the “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 RulesGroup that concern amounts greater than 3% of Procedureshareholders’ equity;

reviewing information on significant events related to the Company’s affairs, in particular for investments or divestments that are summarized below.greater than 1% of shareholders’ equity;

Each director undertakesconducting 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 and the proper exercise of duties and responsibilities by the bodies of the Company 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;

–

the committees it has created duly perform their responsibilities;

monitoring the quality of the information provided to maintain the independenceshareholders 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 his analysis, judgment, decision making and actions as well as notbondholders;

preparing, for each year, a list of the directors it deems to be unduly influenced. 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 rules of 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 Directors’ ethical rules as described in the Code of Corporate 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 a director participatesdirectors participate in and votesvote at Board meetings, he isthey are required to represent the interest of the shareholders and the Company as a whole.

Independence of judgment: Directors must actively participate inundertake, under any circumstance, to maintain the affairsindependence of thetheir

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.

Preparation of each Board specifically on the basis of information communicated to them by the Company.

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 or theand Chief Executive Officer. A director,Directors, if he considersthey 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 participate inattend all Board meetings and all committees or shareholders’ meetings,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 is made publicly available by the Company.

Each directorThe 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, and the main press articles about the Company.

Duty of loyalty: Directors cannot take advantage of their office or duties to ensure, for themselves or a third party, any monetary or non-monetary benefit.

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 conflictsDirectors of interesttheir entering into 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 arise, including the nature and termsbe considered as compromising their independence.

Duty of any proposed transactionsexpression: Directors are committed to clearly expressing their opposition if they deem that could give rise to such situations. If he is opposed to a project brought beforedecision made by the Board heof 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: While in office, directors are required to clearly express his opposition. He is required to own at least 1,000 companyhold the minimum number of registered shares in registered form (withas set by the exception of the director representing employee shareholders, for whom the requirements are more flexible) and comply strictly with provisions regarding the use of material non-public information. The requirement to hold a minimum of 1,000 shares while in office is accepted by each director as a restriction on his ability to freely dispose of these shares.Company’s by-laws.

In addition to stipulating thatDirectors refrain from trading any shares and ADRs of TOTAL S.A. and its publicly traded subsidiaries held byfor which they hold non-public information that could impact the securities’ market value. To this purpose, directors are to be heldact in registered form,compliance with the Rules of Procedure prohibit following procedures:

•

any shares and ADRs of TOTAL S.A. and its publicly traded subsidiaries are to be held in registered form, either with the Company or its agent(1), or administered registered shares with a French broker (or U.S. broker for ADRs) whose contact details are communicated to the Board’s Secretary by the director;

buying on margin or short selling (Paris option market (MONEP), warrants, exchangeable obligations, etc.) those same securities. Theysecurities is also prohibit trading shares of TOTAL S.A.prohibited;

any transaction on the dates ofTOTAL share (or ADR) is strictly prohibited, including hedging transactions, on the Company’sday when the Company discloses its periodic earnings announcements,(quarterly, interim and annual) as well as the 15fifteen calendar days preceding such dates.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.

TheBoardWorkings of Directors’ mission 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 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 and supervising the handling of their responsibilities;

defining the Company’s strategic orientation and, more generally, that of 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;

monitoring the quality of information supplied to 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

conducting audits and investigations as it may deem appropriate.

The Board, with the assistance of its specialized committees where appropriate, ensures that:

authority within the Company has been properly delegated before it is exercised, and that the various entities of the Company respect the authority, duties and responsibilities they have been given;

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.

The Board of Directors is regularly informed, through the Audit Committee, of the Group’s financial position, cash position and obligations.

Board of Directors’ activity:

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 are generally given written notice eight days priorcan delegate their authority to Board meetings. Documents to be considered for decisions to be madeanother director at Boardthe meetings are, when possible, sent with the notice of meetings, or otherwise delivered to the directors. The minutes of the previousBoard, within the limit of one delegation per director per meeting.

Whenever authorized by the law, those directors attending the meeting are expressly approved at eachof the Board meeting.

Directors may participate in meetings either by being present, by being represented by another director or 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 may establish specialized committees, whether permanent or ad hoc, as required by applicable legislation or as it may deem appropriate. 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.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. It alsoSuch 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:Chairman

The Chairman represents the Board, and, except inunder exceptional circumstances, is the sole member authorized to act and speak on behalf of the Board.

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 is 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. 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: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 rules of procedure of the Board of Directors, 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’Shareholders’ meetings. He

The Chief Executive Officer is responsible for periodic reporting of the Group’s results and outlook to shareholders and the financial community. He

At each meeting of the Board, the Chief Executive Officer reports on significant Group activities to the Board.highlights of the Group’s activity.

Committees of the Board of Directors

The Board of Directors has three specialized committees:approved the creation of:

an Audit Committee, the Compensation Committee, and theCommittee;

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 CommitteeCommittees of the Board of Directors

The Audit Committee’s role is to assistCommittees 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 ensuring effectiveprinciple 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 oversight over financial reportingthat published information available to shareholders and financial markets is reliable, the financial markets. The Audit Committee’s duties of the Committee 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 statutory financial statements and consolidated financial statements;

examining the accounting policies used to prepare the financial statements and examining the parent company’s annualCompany’s statutory financial statements and the 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 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;

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,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 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 Audit Committeecommittee, 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.

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 meetsconsults with the statutory auditors and examines their work, and may do soauditors. It has the capacity of consulting them without management being present. 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 2008,2011, the Committee’s members were Messrs. Antoine Jeancourt-Galignani, Bertrand Jacquillat,Ms. Patricia Barbizet, Mr. Thierry de Rudder and from July 31, 2008, Mrs. Patricia Barbizet. Mr. Bertrand Jacquillat, 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 above.fields.

The Committee is chaired by Mr. Antoine Jeancourt-Galignani, who was determinedMs. Barbizet.

At its meeting on July 28, 2011, the Board of Directors decided to beappoint Ms. Barbizet to serve as the Audit Committee financial expert based on a recommendation by the Board atAudit Committee.

At its meeting on September 5, 2006.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

In February 2007,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 was separated from(hereafter, the then existing Nominating & Compensation Committee. “Committee”).

The principal objectivesmembers of thisthe Committee are to: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:

 

examineexamining 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

evaluatepreparing reports which the performance and recommend the compensation of the Chairman of the Board and of the Chief Executive Officer.Company must present in these areas.


ItsDuties:The Committee’s duties include the following:include:

 

examining the criteria andmain objectives proposed by the Company’s general management forregarding compensation of the Group’s executive compensationofficers, 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:

 (i)–

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,

 (ii)–awards of

stock optionsoption and restricted share grants, particularly grants of registered shares to the Chairman and the Chief Executive Officer; andcorporate executive officers;

examining the compensation of the members of the Executive Committee, including stock option plans,and restricted share grants,grant plans and equity-based plans, and pension and insurance plans.plans and in-kind benefits;

preparing and presenting reports in accordance with these rules of procedure;

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.

Compensation 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 Compensation Committee may not receive from the Company and its subsidiaries, either 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 dependantdependent 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 compensation.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 2008,2011, the Committee’s members were Messrs. Patrick Artus, Bertrand Collomb, Thierry Desmarest and Michel Pébereau. Messrs. Artus, Collomb and Pébereau and Serge Tchuruk, each anare independent director.

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

In February 2007,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 was separated from(hereafter, the then existing Nominating & Compensation Committee. “Committee”).

The principal objectivesmembers of thisthe Committee are to: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:

 

recommendrecommending to the Board of Directors the persons that are qualified to be appointed as directors, Chairman or Chief Executive Officer;so as to guarantee the scope of coverage of the Directors’ competencies and the diversity of their profiles;

preparerecommending 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 supervisesupervising their implementation; and

examineexamining any questions referred to it by the Board or the Chairman of the Board, in particular questions related to ethics.ethics and situations of conflicting interests.

ItsDuties:The Committee’s duties include the following:include:

 

presenting recommendations to the Board for its membership and the membership of its committees;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 Company;shareholders;

assisting the Board of Directors in the selection and evaluation of the Chairman of the Board and the Chief Executive Officercorporate executive officers and examining the preparation of their possible successors, in cooperation with the Compensation Committee;including cases of unforeseeable absence;

preparingrecommending 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 listCommittee of individuals who might be considered for election as Directors and those who might be named to serve onthe Board committees;of Directors;

proposing methods for the Board of Directors to evaluate its performance;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;

proposing to the procedureBoard of Directors the terms and conditions for allocating directors’ fees;fees and the conditions under which expenses incurred by the directors are reimbursed;


developing and recommending to the Board of Directors the corporate governance principles applicable to the Company.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 of the Board of Directors.

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:

(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 dependantdependent 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 may inviteinvites the Chairman of the Board or the Chief Executive Officer of the Company, as applicable, to present recommendations.

Neither The corporate executive officers, whether they are members of the Chairman nor the Chief Executive OfficerCommittee or

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 2008,2011, the Committee’s members were Messrs. Bertrand Collomb, Thierry Desmarest and Michel Pébereau. Messrs. Collomb and Pébereau 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 Serge Tchuruk. Each,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.

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 exceptionterm 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 is an independent director.

Mr. Thierry Desmarestof 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 11, 2009,10, 2011, the Board of Directors discussed its practices.practices and made suggestions for improvement with respect to broadening criteria when benchmarking with other companies, and for a thorough

Pursuantstudy 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 recommendationBoard 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 at its meeting on February 11, 2009, the Board concludedand summarized. It is this summary that its methods and practices were appropriate to meet its responsibilities, both in regards to the number and length of its meetings and to the issues addressed at these meetings. In particular, it concluded that matters related to the technical, economic and geopolitical environment had been adequately addressed through the agenda of its meetings in 2008. In addition, the Board decided that certain cross-functional issues related to the environment and transportation would be examined starting in 2009.

Policy for determining the compensation and other benefits of the Chairman and of the Chief Executive Officer

Based on a proposal by the Compensation Committee, on February 11, 2009, the Board adopted the following policy for determining the compensation and other benefits of the Chairman and of the Chief Executive Officer:

Compensation and benefits for the Chairman and the Chief Executive Officer are setwas discussed by the Board of Directors after considering proposals from the Compensation Committee. Such compensation shall be reasonable and fair, inDirectors.

The formal evaluation showed 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, 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 criteria for variable compensation are designed to allow exceptional circumstances 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 employeesgenerally positive opinion of the Group under conditions determined by the Board.

Stock options are designed to align the long-term interestspractices 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.

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 are awarded at regular intervals to prevent opportunistic behavior.

The Board has put in place restrictions on the transfer of a portion of shares issued 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.

The Chairman and Chief Executive Officer do not receive restricted share grants.

Director independence

At its meeting on February 11, 2009, the Board of Directors acting on a proposal fromand the Nominating & GovernanceCommittees, 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, reviewedand work in this area will continue for the independencebenefit of

the Company’s directors as of December 31, 2008. Also based on the Committee’s proposal, the Board considered that, pursuant to the AFEP-MEDEF Code, 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 judgement”.

Mrs. Barbizet, Mr. Bouton, Mr. Collomb, Mr. Desmarais, Mr. Jacquillat, Mr. Jeancourt-Gallignani, Lord Levene of Portsoken, Mr. Mandil, Mr. Pébereau, Mr. de Rudder, Mr. Tchuruk and Mr. Vaillaud were deemed to be independent directors.

These directors meet the criteria set forth in the AFEP-MEDEF Code, with the exception of one individual who has been a director for longer than twelve years. For a company that has long-term investments and activities, a longer term of office gives experience and authority, and thereby reinforces the independence of directors. The Board concluded that Mr. Tchuruk, the only director concerned by this criterion, should be considered as independent.

Concerning “material” relationships, as a client, supplier, investment or finance banker, between a directorDirectors and the Company, the Board deemed that the level of

activity between Group companies and the banks at which two of its Directors are officers, which is less than 0.1% of their net banking income and less than 5% of the Group’s overall external financing (including confirmed but undrawn credit lines) represent neither a material portion of the overall activity of these banks nor a material portion of the Group’s external financing. The Board concluded that Mr. Bouton and Mr. Pébereau should be considered as independent Directors.

75% of the directors are independent.

The Board also noted the absence of potential conflicts of interests between the Company and its directors.Group.


Employees, Share Ownership, Stock Options and Restricted Share GrantsEMPLOYEES 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

2008

  16,005  34,040  45,545  1,369  96,959

2007

  15,182  34,185  45,797  1,278  96,442

2006

  14,862  34,467  44,504  1,237  95,070
        France  Rest of Europe  Rest of world  Total

2008

    37,101  27,495  32,363  96,959

2007

    37,296  27,374  31,772  96,442

2006

    37,831  26,532  30,707  95,070
    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  

 

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 of the Company

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.companies having adhered to these plans. These plans allow investments in a number of mutual funds including one that investsinvested 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.

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 companies.subsidiaries. In addition, U.S. employees participate in these operations through ADRsAmerican Depositary Receipts (ADRs) and Italian employees

(as well as German employees starting in 2011) may participate by directly subscribing to new shares at the Group Caisse Autonome of the Group in Belgium.

IncentiveProfit-sharing agreements

Performance indicators used underUnder the June 30, 2006,26, 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, 2008,2011, is as follows:

 

“TOTAL ACTIONNARIAT FRANCEFRANCE”

  69,206,75478,607,765

“TOTAL ACTIONNARIAT INTERNATIONAL CAPITALISATIONCAPITALISATION”

  16,364,27219,691,590

ELF PRIVATISATION No.1N°1

  1,423,273929,494

Shares held by U.S. employees

  779,445454,305

Group Caisse Autonome in Belgium(Belgium)

  336,001436,431

TOTAL shares from the exercise of the Company’s stock options and held as registered shares within a Company Savings Plan (PEE)(a)

  3,201,2433,293,822

Total shares held by employee shareholder funds

  91,310,988103,413,407

(a)Company savings plans.

As of December 31, 2008,2011, 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, 91,310,988103,413,407 TOTAL shares, representing 3.85%4.37% of the Company’s share capital and 7.40%8.01% of the voting rights that could be exercised at a shareholders’ meetingShareholders’ Meeting on that date.

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.

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’ meetingShareholders’ Meeting held on May 11, 2007,21, 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 26twenty-six months from the date of the meeting, by an amountreserving 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 exceedingexceed 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 was specified that the amount of any such capital increase reserved for Group employees would be counted against the aggregate maximum nominal amount of share capital increases authorized by the shareholders’ meeting held on May 11, 2007, for issuing new ordinary shares or other securities granting immediate or future access to the Company’s share capital with pre-emptive subscription rights (4 B€ in nominal value). This delegation of authority has cancelled and replaced, for the unusedmade.

part, the one granted by the shareholders’ meeting of May 17, 2005.

Pursuant to this delegation of authority, the Board of Directors decided on November 6, 2007,October 28, 2010 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 in 2011, bearing dividends as of January 1, 2007. In accordance with Article 142010. The Board of Directors decided to delegate the FrenchAutorité des marchés financiers (AMF) instruction No. 2005-11 as of December 13, 2005, regardingauthority to set the information to be disclosed in case of a capital increase operation, TOTAL S.A. released on January 16, 2008, on its website and filed with the AMF a press release which specified the terms of the offering. The offering was openedsubscription period to the employees of TOTAL S.A.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 employees of its French and foreign subsidiaries in which TOTAL S.A. holds directly or indirectly 50%subscription price per ordinary share would be set at least of the capital, who are participants€34.80.

The subscription resulted in the issuance in 2011 of 8,902,717 TOTAL Group Savings Plan (PEG-A) and for which local regulatory approval was obtained. The offering was also open to former employees of TOTAL S.A. and its French

subsidiaries who have retired and still have holdings in TOTAL employee savings plans. Subscription was open from March 10, 2008, through March 28, 2008, and 4,870,386 new TOTAL shares were issued in 2008.shares.

Shares held by directorsthe administration and executive officersmanagement bodies

As of December 31, 2008,2011, based uponon information from the members of the Board and the share registrar, the members of the Board and the Group Executive Officers of the Group (Management

(Management Committee and Treasurer) held a total of less than 0.5% of the Company’s shares:share capital:

 

Members of the Board of Directors (including the Chairman and the Chief Executive Officer): 569,094 shares.317,306 shares;

Chairman of the Board of Directors: 385,576 shares.

and Chief Executive Officer: 85,230105,556 shares and 39,33053,869 shares of the TOTAL“TOTAL ACTIONNARIAT FRANCEFRANCE” collective investment plan.plan;

Management Committee and Treasurer (including the Chief Executive Officer): 830,461 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 equal in value to two years of the fixed portion of their annual compensation.

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 offrom 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 plans (FCPE)funds invested in TOTAL shares.


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 20082011 by the individuals concerned under paragraphs a) through c) of Article L. 621-18-2 of the French Monetary and Financial Code.

Year 2008

   Acquisition Subscription Transfer Exchange 

Exercise
of stock

options

Thierry Desmarest(a)

  TOTAL shares 12,000  160,000  139,000
  

Shares in collective investment plans (FCPE), and other related financial instruments(b)

 
Year 2011  Acquisition   Subscription   Transfer   Exchange   Exercise
of stock
options		 

Christophe de Margerie(a)

  TOTAL shares   45,982  73,012  TOTAL shares   —     —     93,250     —     113,576  
  

Shares in collective investment plans (FCPE), and other related financial instruments(b)

 1,713.28 1,857.26   Shares in collective investment plans (FCPE), and other related financial instruments(b)   5,340.09     —     —     —     —  

Michel Bénézit(a)

  TOTAL shares   135    TOTAL shares   —     —     —     —     
  

Shares in collective investment plans (FCPE), and other related financial instruments(b)

 149.18 4,539.46 

Robert Castaigne(a)(c)

  TOTAL shares   10,000  39,696
  

Shares in collective investment plans (FCPE), and other related financial instruments(b)

 7,100.00 6,950.00   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   13,576  13,576  TOTAL shares   —     —     9,000     —     
  

Shares in collective investment plans (FCPE), and other related financial instruments(b)

 557.46 4,353.00   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     2,500  TOTAL shares   —     —     14,412     —     6,412  
  

Shares in collective investment plans (FCPE), and other related financial instruments(b)

 2.52 2,071.08 2,108.45   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   14,000  3,043  TOTAL shares   —     —     29,163     —     29,163  
  

Shares in collective investment plans (FCPE), and other related financial instruments(b)

 232.22 3,928.61 1,320.03   Shares in collective investment plans (FCPE), and other related financial instruments(b)   1,008.85     14,320.92     8,636.03     —     —  

Antoine Jeancourt-Galignani(a)

  TOTAL shares 1,000    
Bertrand Jacquillat(a)(c)  TOTAL shares   300     —     33     —     —  
  

Shares in collective investment plans (FCPE), and other related financial instruments(b)

   Shares in collective investment plans (FCPE), and other related financial instruments(b)   —     —     —     —     —  

Patrick de La Chevardière(a)(d)

  TOTAL shares     
Patrick de La Chevardière(a)  TOTAL shares   —     —     —     —     —  
  

Shares in collective investment plans (FCPE), and other related financial instruments(b)

 21.06 113.07     Shares in collective investment plans (FCPE), and other related financial instruments(b)   756.08     14,998.66     7,587.71     —     —  

 

(a)Including the related personsindividuals in the meaning of the provisions of the Article R. 621-43-1 of the French Monetary and Financial Code.
(b)Collective investment plansfunds (FCPE) primarily investinginvested in Company shares.
(c)Until May 30, 2008.
(d)From June 1, 2008.

Stock optionsDirector and restricted share grants policy

General policy

Stock options and restricted share grants concern only shares of TOTAL S.A. No options for or restricted grants of shares of any of the Group’s listed subsidiaries are awarded.

All plans are approved by the Board of Directors, based on recommendations by the Compensation Committee. For each plan, the Compensation Committee proposes a list of the beneficiaries and the number of options or restricted shares granted to each beneficiary. The Board of Directors then gives final approval for this list.

Stock options have a term of eight years, with an exercise price set at the average of the opening share prices during the 20 trading days prior to the award date, without any discount being applied. For the option plans established after 2002, options may only be exercised after an initial two-year period and the shares issued upon exercise may not be transferred prior to the termination of an additional two-year holding period. For the option plans established on July 17, 2007 and October 9, 2008, decided by the Board of Directors on July 17, 2007 and September 9, 2008, respectively, the transfer or conversion to bearer shares of shares issued from the exercise of stock options, for the beneficiaries of an employment contract with a non-French subsidiary on the date of the award, can take place after the termination of the initial two-year period.

Restricted share grants become final after a two-year vesting period, subject to a performance condition related to the Return on Equity (ROE) of the Group, based on the Group’s consolidated accounts in the fiscal year preceding the year of final attribution. 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 subject to these performance conditions, the restricted share grants become final. However, these shares may not be transferred prior to the end of an additional two-year holding period.

For the 2006, 2007 and 2008 Plans, the conditional restricted share grants are subject to a performance condition. This condition states that the number of restricted shares finally granted is based on the ROE of the Group related to the fiscal year preceding the year of the final grant. This final acquisition rate, expressed as a percentage of the restricted shares granted by the Board of Directors:

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 2005 Plan was subject to a performance condition that stated that the acquisition rate of the restricted shares granted was equal to zero if the ROE for 2006 was less than 10%, equal to 100% if the ROE was more than 20% and varied on a straight-line basis between 0% and 100% if the ROE was between 10% and 20%.

The grant of these options or restricted shares is used to complement, based upon individual performance assessments at the time of each plan, the Group-wide policy of developing employee shareholding (including saving plans, and capital increases reserved for employees every two years) which allows employees to be more closely associated with the financial and share price performance of TOTAL.

Grants to the Chairman, the Chief Executive Officer and executive officers

Pursuant to the requirements introduced by French law 2006-1770 of December 30, 2006, the Board of Directors decided that, for the share subscription option plans of July 17, 2007 and October 9, 2008, the Chairman of the Board and the Chief Executive Officer will have to hold a number of TOTAL shares representing 50% of the capital gains, net of tax and related contributions, resulting from the exercise of stock options under these plans in the form of TOTAL shares. Once the Chairman and the Chief Executive Officer hold a number of shares (including shares or interests in collective investment funds invested in Company securities) corresponding to more than five times their current gross annual fixed salary, 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.

The Chairman of the Board of Directors was not granted any stock options under the plan of October 9, 2008, created by the Board of Directors on September 9, 2008.

In addition, the Chairman of the Board of Directors was not granted any restricted shares under the plans awarded on July 18, 2006, July 17, 2007 and October 9, 2008.

The Chief Executive Officer was not granted any restricted shares under the plans awarded on July 18, 2006, July 17, 2007 and October 9, 2008.


In addition, as part of the share subscription option plans awarded on July 17, 2007 and September 9, 2008, the Board required that, for each beneficiary of more than 25,000 stock options, one third of the options granted in excess of this number be subject to a performance condition. This condition states that the final grant rate will be based on the ROE of the Group. The ROE will be calculated on the consolidated accounts published by TOTAL related to the fiscal year preceding the year of vesting. The grant 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%.


SUMMARY OF COMPENSATION, STOCK OPTIONS AND RESTRICTED SHARES GRANTED TO THE CHAIRMAN AND THE CHIEF EXECUTIVE OFFICER

(€)  2008  2007

Thierry Desmarest

Chairman of the Board of Directors

    

Compensation(a)

  2,069,430  2,263,905

Value of options granted(b)

  —    1,529,000

Value of restricted shares granted(c)

  —    —  

Total

  2,069,430  3,792,905

Christophe de Margerie

Chief Executive Officer

    

Compensation(a)

  2,808,395  2,693,435

Value of options granted(b)

  998,000  2,780,000

Value of restricted shares granted(c)

  —    —  

Total

  3,806,395  5,473,435

(a)Compensation further detailed in the table “— Compensation of the Chairman and the Chief Executive Officer”.
(b)Options granted in 2008 are detailed in the table “— Stock options granted in 2008 to the Chairman and the Chief Executive Officer”. The value of options granted was calculated on the day they were granted using the Black-Scholes model based on the assumptions used for the consolidated accounts (see Note 25 to the Consolidated Financial Statements).
(c)The Chairman and Chief Executive Officer were not granted any restricted shares as part of the plans awarded on July 17, 2007 and October 9, 2008.

COMPENSATION OF THE CHAIRMAN AND THE CHIEF EXECUTIVE OFFICER

    2008  2007
(€)  Amount
due for
2008		  Amount
paid in
2008(a)		  Amount
due for
2007		  Amount
paid in
2007(a)

Thierry Desmarest

Chairman of the Board of Directors

Fixed compensation

  1,100,000  1,100,000  1,151,706  1,151,706

Variable compensation(b)

  969,430  1,112,199  1,112,199  1,676,109

Extraordinary compensation

  —    —    —    —  

Directors’ fees

  —    —    —    —  

In-kind benefits

  —    —    —    —  

Total

  2,069,430  2,212,199  2,263,905  2,827,815

Christophe de Margerie

        

Chief Executive Officer

        

Fixed compensation

  1,250,000  1,250,000  1,191,580  1,191,580

Variable compensation(c)

  1,552,875  1,496,335  1,496,335  705,140

Extraordinary compensation

  —    —    —    —  

Directors’ fees

  —    —    —    —  

In-kind benefits(d)

  5,520  5,520  5,520  5,520

Total

  2,808,395  2,751,855  2,693,435  1,902,240

(a)Variable portion paid for prior fiscal year.
(b)The variable portion for the Chairman 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 other major international oil companies, as well as the Chairman’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 met in 2008.
(c)The variable portion for the 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 other major international oil companies as well as the Chief Executive Officer’s personal contribution based on operational target criteria. The variable portion can reach a maximum amount of 140% of the fixed base salary, which may be increased up to 165% for exceptional performance. The objectives related to personal contribution were considered to be met in 2008.
(d)Mr. de Margerie has the use of a company car.

STOCK OPTIONS GRANTED IN 2008 TO THE CHAIRMAN AND THE CHIEF EXECUTIVE OFFICER

    Date of plan  Type of options  Value of
options (€)		  Number of options
granted during
fiscal year(a)		  Exercise
price (€)		  Exercise period

Thierry Desmarest

  2008 Plan(b) Subscription
options		  —    —    —    —  

Chairman of the Board of Directors

  10/09/2008               

Total

        —    —        

Christophe de Margerie

  2008 Plan(b) Subscription
options		  998,000(c) 200,000  42.90  October 10, 2010

Chief Executive Officer

  10/09/2008              October 9, 2016

Total

        998,000(c) 200,000      

(a)As part of the share subscription option plan awarded on October 9, 2008, the Board of Directors decided that for each beneficiary of more than 25,000 options, a portion of these options will be finally awarded after a two-year vesting period, subject to a performance condition.
(b)Option plan decided by the Board of Directors on September 9, 2008, and awarded on October 9, 2008.
(c)The value of options granted was calculated on the day they were granted using the Black-Scholes model based on the assumptions used for the consolidated accounts (see Note 25 to the Consolidated Financial Statements).

STOCK OPTIONS EXERCISED IN 2008 BY THE CHAIRMAN AND THE CHIEF EXECUTIVE OFFICER

    Date of plan  Number of options
exercised during
fiscal year		  Exercise
price (€)

Thierry Desmarest

  2002 Plan    

Chairman of the Board of Directors

  07/09/2002  139,000  39.03

Total

     139,000   

Christophe de Margerie

Chief Executive Officer

  2000 Plan

07/11/2000

  73,012  40.11

Total

     73,012   

RESTRICTED SHARE GRANTS AWARDED IN 2008 TO THE CHAIRMAN, THE CHIEF EXECUTIVE OFFICER OR ANY DIRECTOR (CONDITIONAL AWARD)

    Date of plan  Number of shares
granted during
fiscal year		  Value of
shares
granted (€)(a)		  Acquisition
date		  Availability
date		  Performance
condition

Thierry Desmarest

Chairman of the Board of Directors

  2008 Plan

10/09/2008

(b)

 

 —    —    —    —    —  

Christophe de Margerie

Chief Executive Officer

  2008 Plan

10/09/2008

(b)

 

 —    —    —    —    —  

Daniel Boeuf

Director representing the employee shareholders

  2008 Plan

10/09/2008

(b)

 

 588  18,175  10/10/2010  10/10/2012  Condition based on the Group’s ROE for fiscal year 2009

Total

     588  18,175         

(a)The value of the restricted shares granted is determined on the day of the award in compliance with IFRS 2.
(b)Share grant decided by the Board of Directors on September 9, 2008, and awarded on October 9, 2008. The Chairman and Chief Executive Officer were not granted any restricted shares as part of the plan awarded on October 9, 2008.

RESTRICTED SHARES FINALLY GRANTED IN 2008 TO THE CHAIRMAN, THE CHIEF EXECUTIVE OFFICER OR ANY DIRECTOR

Date of planNumber of shares
finally granted during
fiscal year(a)		Acquisition
condition

Thierry Desmarest

Chairman of the Board of Directors

2006 Plan

07/18/2006

—  n/a

Christophe de Margerie

Chief Executive Officer

2006 Plan

07/18/2006

—  n/a

Daniel Boeuf

Director representing the employee shareholders

2006 Plan

07/18/2006

416(b)

Total

416

(a)Shares finally granted to the beneficiaries after a 2-year vesting period (i.e., on July 19, 2008).
(b)The Chairman and Chief Executive Officer were not granted any restricted shares as part of the plan decided by the Board of Directors on July 18, 2006. In addition, the Board of Directors on May 6, 2008 noted that the acquisition rate, connected to the performance condition, amounted to 100%. Moreover, the transfer of the restricted shares finally granted will only be permitted after the end of a 2-year mandatory holding period (i.e., from July 19, 2010).

TOTAL stock options plans

The following table gives a breakdown of stock options awarded by category of beneficiaries (executive officers, senior managers and other employees) for the plans in effect during 2008.

        Number of
beneficiaries		  Number of
options
awarded(i)		  Percentage  Average number
of options per
beneficiary(i)

2000 Plan(a)(f):

         

Purchase options

  Executive officers(g)  24  246,200  10.2% 10,258

(Decision of the Board on July 11, 2000; exercise price:€162.70; discount: 0.0%, exercice price since May 24, 2006:€40.11(i))

  

Senior managers

Other employees

  298
2,740		  660,700
1,518,745		  27.2

62.6

%

%

 2,217
554
  Total  3,062  2,425,645  100% 792

2001 Plan(b)(f):

         

Purchase options

  Executive officers(g)  21  295,350  11.0% 14,064

(Decision of the Board on July 10, 2001; exercise price:€168.20; discount: 0.0%, exercice price since May 24, 2006:€41.47(i))

  

Senior managers

Other employees

  281
3,318		  648,950
1,749,075		  24.1

64.9

%

%

 2,309
527
  Total  3,620  2,693,375  100% 744

2002 Plan(c)(f):

         

Purchase options

  Executive officers(g)  28  333,600  11.6% 11,914

(Decision of the Board on July 9, 2002; exercise price:€158.30; discount: 0.0%, exercice price since May 24, 2006:€39.03(i))

  

Senior managers

Other employees

  299
3,537		  732,500
1,804,750		  25.5

62.9

%

%

 2,450
510
  Total  3,864  2,870,850  100% 743

2003 Plan(c)(f):

         

Subscription options

  Executive officers(g)  28  356,500  12.2% 12,732

(Decision of the Board on July 16, 2003; exercise price:€133.20; discount: 0.0%, exercice price since May 24, 2006:€32.84(i))

  

Senior managers

Other employees

  319
3,603		  749,206
1,829,600		  25.5

62.3

%

%

 2,349
508
  Total  3,950  2,935,306  100% 743

2004 Plan(c):

         

Subscription options

  Executive officers(g)  30  423,500  12.6% 14,117

(Decision of the Board on July 20, 2004; exercise price:€159.40; discount: 0.0%, exercice price since May 24, 2006:€39.30(i))

  

Senior managers

Other employees

  319
3,997		  902,400
2,039,730		  26.8

60.6

%

%

 2,829
510
  Total  4,346  3,365,630  100% 774

2005 Plan(c):

         

Subscription options

  Executive officers(g)  30  370,040  24.3% 12,335

(Decision of the Board on July 19, 2005; exercise price:€198.90; discount: 0.0%, exercice price since May 24, 2006:€49.04(i))

  

Senior managers

Other employees

  330
2,361		  574,140
581,940		  37.6

38.1

%

%

 1,740
246
  Total  2,721  1,526,120  100% 561

2006 Plan(c):

         

Subscription options

  Executive officers(g)  28  1,447,000  25.3% 51,679

(Decision of the Board on July 18, 2006; exercise price:€50.60; discount: 0.0%)

  

Senior managers

Other employees

  304
2,253		  2,120,640
2,159,600		  37.0

37.7

%

%

 6,976
959
  Total  2,585  5,727,240  100% 2,216

        Number of
beneficiaries		  Number of
options
awarded(i)		  Percentage  Average number
of options per
beneficiary(i)

2007 Plan(d):

         

Subscription options

  Executive officers(g)(h)  27  1,329,360  22,8% 49,236

(Decision of the Board on July 17, 2007; exercise price:€60.10; discount: 0.0%)

  

Senior managers

Other employees

  298
2,401		  2,162,270
2,335,600		  37,1

40,1

%

%

 7,256
973
  Total  2,726  5,827,230  100% 2,138

2008 Plan(e):

         

Subscription options

  Executive officers(g)(h)  26  1,227,500  27.6% 47,212

(Grant decided by the Board of Directors on September 9, 2008 and awarded on October 9, 2008; exercise price:€42.90; discount: 0.0%)

  

Senior managers

Other employees

  298
1,690		  1,988,420
1,233,890		  44.7

27.7

%

%

 6,673
730
  Total  2,014  4,449,810  100% 2,209

(a)Options are exercisable after a four-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 the five-year period from the date of the Board meeting awarding the options.
(b)Options are exercisable after January 1, 2005, and expire eight years after the date of the Board meeting awarding the options. The underlying shares may not be transferred during the four-year period from the date of the Board meeting awarding the options.
(c)Options are exercisable after a two-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 the four-year period from the date of the Board meeting awarding the options.
(d)Options are exercisable after a two-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 the four-year period from the date of the Board meeting awarding the options. The four-year transfer restriction period does not apply to employees of non-French subsidiaries as of July 17, 2007, who may transfer the underlying shares after July 18, 2009.
(e)Options are exercisable after a two-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 the four-year period from the date of the Board meeting awarding the options. The four-year transfer restriction period does not apply to employees of non-French subsidiaries as of October 09, 2008, who may transfer the underlying shares after October 10, 2010.
(f)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.
(g)Members of the Management Committee and the Treasurer as of the date of the Board meeting awarding the options.
(h)The Chairman of the Board, not being a member of the ManagementAudit Committee as of the Board of Directors meetings held on July 17, 2007 and September 9, 2008, is not included in the Executive Officers. The Chairman was granted 110,000 options by the July 17, 2007 Board meeting and no option as decided by the Board of Directors on September 9, 2008.
(i)To take into account the spin-off of Arkema, pursuant to Articles 174-9, 174-12 and 174-13 of Decree number 67-236 of March 23, 1967, effective at that time and as of the date of the shareholders’ meeting onuntil 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. 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. Additionally, to take into account the four-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 the four-for-one stock split.

TOTAL STOCK OPTIONS AS OF DECEMBER 31, 2008

   2000 Plan  2001 Plan  2002 Plan  2003 Plan  2004 Plan  2005 Plan  2006 Plan  2007 Plan  2008 Plan  Total 

Type of options

 Purchase
options		 
 		 Purchase
options		 
 		 Purchase
options		 
 		 Subscription
options		 
 		 Subscription
options		 
 		 Subscription
options		 
 		 Subscription
options		 
 		 Subscription
options		 
 		 Subscription
options		 
 		   

Date of the shareholders’ meeting

 May 21,
1997		 
 		 May 17,
2001		 
 		 May 17,
2001		 
 		 May 17,

2001

 

 

 May 14,

2004

 

 

 May 14,

2004

 

 

 May 14,

2004

 

 

 May 11,

2007

 

 

 May 11,

2007

 

 

 

Date of the award(a)

 July 11,
2000		 
 		 July 10,
2001		 
 		 July 9,
2002		 
 		 July 16,

2003

 

 

 July 20,

2004

 

 

 July 19,

2005

 

 

 July 18,

2006

 

 

 July 17,

2007

 

 

 October 9,
2008		 
 		   

Total number of options granted, including(b):

 9,702,580  10,773,500  11,483,400  11,741,224  13,462,520  6,104,480  5,727,240  5,937,230  4,449,810  79,381,984 

• directors(c)

 200,000  300,000  240,000  240,000  240,000  240,720  400,720  310,840  200,660  2,372,940 

• T. Desmarest

 200,000  300,000  240,000  240,000  240,000  240,000  240,000  110,000  —    1,810,000 

• C. de Margerie

 n/a  n/a  n/a  n/a  n/a  n/a  160,000  200,000  200,000  560,000 

• D. Boeuf

 n/a  n/a  n/a  n/a  —    720  720  840  660  2,940 

Additional award

 —    16,000  —    —    24,000  134,400  —    —    —    174,400 

Adjustments related to the spin-off of Arkema(d)

 84,308  113,704  165,672  163,180  196,448  90,280  —    —    —    813,592 

Date as of which the options may be exercised

 July 12,
2004		 
(e)		 January 1,
2005		 
 		 July 10,
2004		 
 		 July 17,

2005

 

 

 July 21,

2006

 

 

 July 20,

2007

 

 

 July 19,

2008

 

 

 July 18,

2009

 

 

 October 10,
2010		 
 		 

Expiration date

 July 11,
2008		 
 		 July 10,
2009		 
 		 July 9,
2010		 
 		 July 16,

2011

 

 

 July 20,

2012

 

 

 July 19,

2013

 

 

 July 18,

2014

 

 

 July 17,

2015

 

 

 October 9,
2016		 
 		 

Exercise price (€)(f)

 40.11  41.47  39.03  32.84  39.30  49.04  50.60  60.10  42.90    

Cumulated number of options exercised as of December 31, 2008

 9,220,289  6,115,039  5,107,425  4,315,134  655,895  38,497  8,620  —    —    

Cumulated number of options cancelled as of December 31, 2008

 566,599  96,739  90,790  87,922  259,896  98,959  67,564  51,785  6,000    

Number of options:

          

• Outstanding as of January 1, 2008

 3,142,188  5,150,258  7,063,183  8,368,378  13,197,236  6,243,438  5,711,060  5,920,105  —    54,795,846 

• Granted in 2008

 —    —    —    —    —    —    —    —    4,449,810  4,449,810 

• Cancelled in 2008

 (480,475) (3,652) (13,392) (25,184) (118,140) (34,032) (53,304) (34,660) (6,000) (768,839)

• Exercised in 2008

 (2,661,713) (455,180) (598,934) (841,846) (311,919) (17,702) (6,700) —    —    (4,893,994)

• Outstanding as of December 31, 2008

 —    4,691,426  6,450,857  7,501,348  12,767,177  6,191,704  5,651,056  5,885,445  4,443,810  53,582,823 

(a)The date of the award is the date of the Board meeting awarding the options, except for the share subscription option plan of October 9, 2008 decided 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 the four-for-one stock split approved by TOTAL’s shareholders’ meeting on May 12, 2006.
(c)Options awarded to directors at the time of award. For the share subscription option plan of July 18, 2006, options awarded to Messrs. Thierry Desmarest, Chairman of the Board of Directors and CEO, Christophe de Margerie, Board member, and Daniel Boeuf, the director representing employee shareholders. For the share subscription option plan of July 17, 2007 and October 9, 2008, options awarded to Messrs. Desmarest, Chairman, de Margerie, CEO, and Boeuf, director representing employee shareholders.
(d)Adjustments approved by the Board on March 14, 2006 pursuant to Articles 174-9, 174-12 and 174-13 of Decree No. 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 of TOTAL S.A. on May 12, 2006, related to the spin-off of Arkema. The adjustments were made on May 22, 2006 and became effective on May 24, 2006.
(e)January 1, 2004 for employees under contract with a subsidiary incorporated outside of France.
(f)Exercise price as of May 24, 2006. To take into account the four-for-one stock split that took place on May 18, 2006, the exercise price of stock options from plans then-current has been divided by four. In addition, to take into account the Arkema spin-off, 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.

If all the outstanding stock options as of December 31, 2008, were exercised, the corresponding shares would represent 2.22%(1) of the Company’s potential share capital as of December 31, 2008.

(1)Out of a total potential share capital of 2,415,383,826 shares, including 2,371,808,074 existing shares as of December 31, 2008, 42,965,666 shares that could be issued through the exercise of stock options awarded by the Company and 610,086 new shares that could be issued through the exercise of Elf Aquitaine options that benefit from exchange rights for TOTAL shares.

TOTAL STOCK OPTIONS AWARDED TO EXECUTIVE OFFICERS (MANAGEMENT COMMITTEE AND TREASURER) AS OF DECEMBER 31, 2008

   2000 Plan  2001 Plan  2002 Plan 2003 Plan  2004 Plan  2005 Plan 2006 Plan 2007 Plan 2008 Plan Total 
Type of options Purchase
options		  Purchase
options		  Purchase
options		 Subscription
options		  Subscription
options		  Subscription
options		 Subscription
options		 Subscription
options		 Subscription
options		    

Expiration date

 July 11, 2008  July 10, 2009  July 9, 2010 July 16, 2011  July 20, 2012  July 19, 2013 July 18, 2014 July 17, 2015 October 9, 2016 

Exercise price (€)(a)

 40.11  41.47  39.03 32.84  39.30  49.04 50.60 60.10 42.90   

Options granted by the Board(b)

 523,800  627,000  722,400 808,904  1,028,000  882,240 1,016,920 1,203,840 1,240,000 8,053,104 

Adjustments related to the spin-off of Arkema(c)

 3,972  5,116  9,856 10,492  14,500  12,316 —   —   —   56,252 

Outstanding options as of January 1, 2008

 191,320  319,460  401,232 536,268  1,033,500  894,664 1,016,920 1,203,840  5,597,204 

Options awarded in 2008(d)

 —    —    —   —    —    —   —   —   1,240,000 1,240,000 

Options exercised in 2008

 (177,120) (2,500) —   (82,849) (14,368) —   —   —   —   (276,837)

Options cancelled in 2008

 (14,200) —    —   —    —    —   —   —   —   (14,200)

Options outstanding as of December 31, 2008

 —    316,960  401,232 453,419  1,019,132  894,664 1,016,920 1,203,840 1,240,000 6,546,167 

(a)Exercise price as of May 24, 2006. To take into account the four-for-one stock split that took place on May 18, 2006, the exercise price of stock options from plans then-current has been divided by four. In addition, to take into account the Arkema spin-off, 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 the four-for-one stock split approved by TOTAL’s shareholders’ meeting on May 12, 2006.
(c)Adjustments approved by the Board on March 14, 2006, pursuant to Articles 174-9, 174-12 and 174-13 of Decree No. 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 of TOTAL S.A. on May 12, 2006, related to the spin-off of Arkema. The adjustments were made on May 22, 2006 and became effective on May 24, 2006.
(d)The number of options awarded in 2008 to executive officers, having this title as of December 31, 2008, does not match the amount shown in the table “— TOTAL stock options as of December 31, 2008”, due to the appointment of a new Management Committee member after the date the Board decided the share option plan.

Certain executive officers of TOTAL as of December 31, 2008, who were previously with the Elf Aquitaine group hold Elf Aquitaine options that, upon exercise, benefit from exchange rights for TOTAL shares based upon the exchange ratio used in the public tender offer of TOTAL for Elf Aquitaine in 1999, adjusted on May 22, 2006 to six TOTAL shares for each Elf Aquitaine share in order to take into account the Arkema spin-off and the four-for-one stock split.

Furthermore, as part of the share subscription option plans of July 17, 2007, and October 9, 2008, the Board of Directors required that for each beneficiary of more than 25,000 stock options, the grant be subject to a performance condition.

In addition, Mr. Daniel Boeuf, the director representing employee shareholders, has not exercised any option in 2008 and was awarded 660 share subscription options on October 9, 2008.

TOTAL STOCK OPTIONS AWARDED TO MR. THIERRY DESMAREST, CHAIRMAN OF THE BOARD OF TOTAL S.A.

   2000 Plan 2001 Plan 2002 Plan  2003 Plan 2004 Plan 2005 Plan 2006 Plan 2007 Plan 2008 Plan Total 
Type of options Purchase
options		 Purchase
options		 Purchase
options		  Subscription
options		 Subscription
options		 Subscription
options		 Subscription
options		 Subscription
options		 Subscription
options		    

Expiration date

 July 11, 2008 July 10, 2009 July 9, 2010  July 16, 2011 July 20, 2012 July 19, 2013 July 18, 2014 July 17, 2015 October 9, 2016 

Exercise price (€)(a)

 40.11 41.47 39.03  32.84 39.30 49.04 50.60 60.10 42.90   

Options granted by the Board(b)

 200,000 300,000 240,000  240,000 240,000 240,000 240,000 110,000 —   1,810,000 

Adjustments related to the spin-off of Arkema(c)

 —   2,532 3,372  2,476 3,372 3,372 —   —   —   15,124 

Outstanding options as of January 1, 2008

 —   —   209,372  —   243,372 243,372 240,000 110,000  1,046,116 

Options awarded in 2008

 —   —   —    —   —   —   —   —   —   —   

Options exercised in 2008

 —   —   (139,000) —   —   —   —   —   —   (139,000)

Options outstanding as of December 31, 2008

 —   —   70,372  —   243,372 243,372 240,000 110,000 —   907,116 

(a)Exercise price as of May 24, 2006. To take into account the four-for-one stock split that took place on May 18, 2006, the exercise price of stock options from plans then-current has been divided by four. In addition, to take into account the Arkema spin-off, 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 the four-for-one stock split approved by TOTAL’s shareholders’ meeting on May 12, 2006.
(c)Adjustments approved by the Board on March 14, 2006, pursuant to Articles 174-9, 174-12 and 174-13 of Decree No. 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 of TOTAL S.A. on May 12, 2006, related to the spin-off of Arkema. The adjustments were made on May 22, 2006, and became effective on May 24, 2006.

As part of the plan awarded on July 17, 2007, the Board has conditioned the award of these options to the Chairman of the Board on the fulfillment of a performance condition.

As of December 31, 2008, the Chairman of the Board of Directors’ outstanding options represent 0.038%(1) of the Company’s potential share capital as of December 31, 2008, and the exercise price of such options exceeds the price of the underlying shares.

(1)Out of a total potential share capital of 2,415,383,826 shares, including 2,371,808,074 existing shares as of December 31, 2008, 42,965,666 shares that could be issued through the exercise of stock options awarded by the Company and 610,086 new shares that could be issued through the exercise of Elf Aquitaine options that benefit from exchange rights for TOTAL shares.

TOTAL STOCK OPTIONS AWARDED TO MR. CHRISTOPHE DE MARGERIE,

CHIEF EXECUTIVE OFFICER OF TOTAL S.A.

   2000 Plan  2001 Plan 2002 Plan 2003 Plan 2004 Plan 2005 Plan 2006 Plan 2007 Plan 2008 Plan Total 
Type of options Purchase
options		  Purchase
options		 Purchase
options		 Subscription
options		 Subscription
options		 Subscription
options		 Subscription
options		 Subscription
options		 Subscription
options		    

Expiration date

 July 11,
2008		 
 		 July 10,
2009		 July 9,
2010		 July 16,
2011		 July 20,
2012		 July 19,
2013		 July 18,
2014		 July 17,
2015		 October 9,
2016		 

Exercise price (€)(a)

 40.11  41.47 39.03 32.84 39.30 49.04 50.60 60.10 42.90   

Options granted by the Board(b)

 72,000  88,000 112,000 112,000 128,000 130,000 160,000 200,000 200,000 1,202,000 

Adjustments related to the spin-off of Arkema(c)

 1,012  1,240 1,576 1,576 1,800 1,828 —   —   —   9,032 

Outstanding options as of January 1, 2008

 73,012  89,240 113,576 113,576 129,800 131,828 160,000 200,000  1,011,032 

Options awarded in 2008

 —    —   —   —   —   —   —   —   200,000 200,000 

Options exercised in 2008

 (73,012) —   —   —   —   —   —   —   —   (73,012)

Options outstanding as of December 31, 2008

 —    89,240 113,576 113,576 129,800 131,828 160,000 200,000 200,000 1,138,020 

(a)Exercise price as of May 24, 2006. To take into account the four-for-one stock split that took place on May 18, 2006, the exercise price of stock options from plans then-current was divided by four. In addition, to take into account the Arkema spin-off, 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 the four-for-one stock split approved by TOTAL’s shareholders’ meeting on May 12, 2006.
(c)Adjustments approved by the Board on March 14, 2006 pursuant to Articles 174-9, 174-12 and 174-13 of Decree No. 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 of TOTAL S.A. on May 12, 2006, related to the spin-off of Arkema. The adjustments were made on May 22, 2006, and became effective on May 24, 2006.

As part of the plans awarded on July 17, 2007 and October 9, 2008, the Board has conditioned the award of these options to the Chief Executive Officer on the fulfillment of a performance condition.

As of December 31, 2008, the Chief Executive Officer’s outstanding options represent 0.047%(1) of the Company’s potential share capital as of December 31, 2008, and only the exercise price of the 2003 Plan options is below the price of the underlying shares.

(1)Out of a total potential share capital of 2,415,383,826 shares, including 2,371,808,074 existing shares as of December 31, 2008, 42,965,666 shares that could be issued through the exercise of stock options awarded by the Company and 610,086 new shares that could be issued through the exercise of Elf Aquitaine options that benefit from exchange rights for TOTAL shares.

STOCK OPTIONS AWARDED TO THE TEN EMPLOYEES (OTHER THAN DIRECTORS) RECEIVING THE LARGEST AWARDS/STOCK OPTIONS EXERCISED BY THE TEN EMPLOYEES (OTHER THAN DIRECTORS) EXERCISING THE LARGEST NUMBER OF OPTIONS

    Total number of options
awarded/options
exercised		  Exercise price (€)  Date of the award(a)  Expiration date

Options awarded in 2008 to the ten employees of TOTAL S.A., or any company in the Group, receiving the largest number of options

  700,000  42.90  10/09/2008  10/09/2016

Options exercised in 2008 by the ten employees of TOTAL S.A., or any company in the Group, exercising the largest number of options(b)

  114,256  40.11  07/11/2000  07/11/2008
  42,430  41.47  07/10/2001  07/10/2009
  34,168  39.03  07/09/2002  07/09/2010
  96,284  32.84  07/16/2003  07/16/2011
  12,172  39.30  07/20/2004  07/20/2012
  299,310  37.81(c)   

(a)The date of the award is the date of the Board meeting awarding the options, except for the share subscription option plan awarded on October 9, 2008, decided by the Board on September 9, 2008.
(b)Exercise price as of May 24, 2006. To take into account the four-for-one stock split that took place on May 18, 2006, the exercise price of stock options from plans then-current has been divided by four. In addition, to take into account the Arkema spin-off, 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.
(c)Weighted-average price.

TOTAL restricted share grants

The following table gives a breakdown of restricted share grants by category of grantee (executive officers, senior managers and other employees).

       Number of
grantees		 Number of
restricted shares
granted(a)		 Percentage 

Average number
of restricted
shares per
beneficiary

2005 Plan(b)

  Executive Officers(f) 29 13,692 2.4% 472

(Decision of the Board on July 19, 2005)

  Senior managers 330 74,512 13.1% 226
  Other employees(g) 6,956 481,926 84.5% 69
  Total 7,315 570,130 100% 78

2006 Plan(c)

  Executive Officers(f) 26 49,200 2.2% 1,892

(Decision of the Board on July 18, 2006)

  Senior managers 304 273,832 12.0% 901
  Other employees(g) 7,509 1,952,332 85.8% 260
  Total 7,839 2,275,364 100% 290

2007 Plan(d)

  Executive Officers(f) 26 48,928 2.1% 1,882

(Decision of the Board on July 17, 2007)

  Senior managers 297 272,128 11.5% 916
  Other employees(g) 8,291 2,045,309 86.4% 247
  Total 8,614 2,366,365 100% 275

2008 Plan(e)

  Executive Officers(f) 25 49,100 1.8% 1,964

(Decision of the Board on September 9, 2008, and awarded on October 9, 2008)

  Senior managers 300 348,156 12.5% 1,161
  Other employees(g) 9,028 2,394,712 85.8% 265
  Total 9,353 2,791,968 100% 299

(a)The number of restricted shares granted shown in this table has not been recalculated to take into account the four-for-one stock split approved by the shareholders’ meeting on May 12, 2006.
(b)Grant approved by the Board on July 19, 2005, pursuant to the authorization given by the shareholders’ meeting on May 17, 2005. These restricted shares, which the Company purchased on the market in 2005, were finally granted after a two-year vesting period (i.e., on July 20, 2007). The final grant was conditioned to fulfilling a performance condition. The Board of Directors on May 3, 2007, noticed that the acquisition rate, connected to the performance condition, amounted to 100%. Moreover, the transfer of the restricted shares will not be permitted between the date of final grant and the end of a two-year mandatory holding period, on July 20, 2009. To provide for the eventual final grant of these restricted shares, the Company purchased 574,000 previously issued shares, par value€10 per share, on the market at an average price of€206.49 per share, par value€10 per share, the equivalent of an average price of€51.62 per share, par value€2.50 per share.
(c)Grant approved by the Board on July 18, 2006, pursuant to the authorization given by the shareholders’ meeting on May 17, 2005. These restricted shares, which the Company purchased on the market in 2006, were finally granted after a two-year vesting period (i.e., on July 19, 2008). The final grant was conditioned to fulfilling a performance condition. The Board of Directors on May 6, 2008, noticed that the acquisition rate, connected to the performance condition, amounted to 100%. Moreover, the transfer of the restricted shares will not be permitted until the end of a two-year mandatory holding period (i.e., from July 19, 2010). To provide for the eventual final grant of these restricted shares, the Company purchased 2,295,684 previously issued shares at an average price of€51.91 per share.
(d)Grant approved by the Board on July 17, 2007, pursuant to the authorization given by the shareholders’ meeting on May 17, 2005. Grants of these restricted shares, which the Company purchased on the market in 2007, will become final, subject to performance conditions after a two-year vesting period (i.e., on July 18, 2009). Moreover, the transfer of the restricted shares will not be permitted until the end of a two-year mandatory holding period (i.e., on July 18, 2011). To provide for the eventual final grant of these restricted shares, the Company purchased 2,387,355 previously issued shares at an average price of€61.49 per share.
(e)Shares granted on October 9, 2008, as decided by the Board at its meeting on September 9, 2008, pursuant to the authorization given by the shareholders’ meeting on May 16, 2008. Grants of these restricted shares, which the Company purchased on the market in 2008, will become final, subject to performance conditions after a two-year vesting period (i.e., on October 10, 2010). Moreover, the transfer of the restricted shares will not be permitted until the end of a two-year mandatory holding period (i.e., on October 10, 2012). To provide for the eventual final grant of these restricted shares, the Company purchased 2,800,000 previously issued shares at an average price of€41.63 per share.
(f)Members of the Management Committee and the Treasurer as of the date of the Board meeting granting the restricted shares. The Chairman of the Board and the Chief Executive Officer were not granted restricted shares under the 2006, 2007 and 2008 Plans.
(g)Mr. Daniel Boeuf, employee of Total Raffinage Marketing, a subsidiary of TOTAL S.A. and the director of TOTAL S.A. representing employee shareholders, was granted 416 restricted shares by the July 19, 2005 Board meeting, 416 restricted shares by the July 18, 2006 Board meeting, 432 restricted shares by the July 17, 2007 Board meeting and 588 shares by the September 9, 2008 Board meeting.

RESTRICTED SHARE PLANS AS OF DECEMBER 31, 2008

    2005 Plan(a)(b)  2006 Plan(c)  2007 Plan(d)  2008 Plan(e) 

Date of the shareholders’ meeting

  May 17, 2005  May 17, 2005  May 17, 2005  May 16, 2008 

Date of the award(f)

  July 19, 2005  July 18, 2006  July 17, 2007  October 9, 2008 

Closing price on the date of the award(g)

  €52.13  €50.40  €61.62  €35.945 

Average repurchase price per share paid by the Company

  €51.62  €51.91  €61.49  €41.63 

Total number of restricted shares granted to

  2,280,520  2,275,364  2,366,365  2,791,968 

• directors(h)

  416  416  432  588 

• ten employees with largest grants(i)

  20,000  20,000  20,000  20,000 

Start of the vesting period

  July 19, 2005  July 18, 2006  July 17, 2007  October 9, 2008 

Date of final grant, subject to specified condition (end of the vesting period)

  July 20, 2007  July 19, 2008  July 18, 2009  October 10, 2010 

Transfer possible from (end of the holding period)

  July 20, 2009  July 19, 2010  July 18, 2011  October 10, 2012 

Number of restricted shares:

     

• Outstanding as of January 1, 2008

  —    2,263,956  2,363,057  —   

• Granted in 2008

  —    —    —    2,791,968 

• Cancelled in 2008

  2,840(k) (43,822) (29,504) (19,220)

• Finally granted in 2008(j)

  (2,840)(k) (2,220,134) (336) —   

• Outstanding as of December 31, 2008

  —    —    2,333,217  2,772,748 

(a)Grant approved by the Board on July 19, 2005, pursuant to the authorization given by the shareholders’ meeting on May 17, 2005. These restricted shares, which the Company purchased on the market in 2005, were finally granted after a two-year vesting period (i.e., on July 20, 2007). The final grant was conditioned to fulfilling a performance condition. The Board of Directors on May 3, 2007, noticed that the acquisition rate, connected to the performance condition, amounted to 100%. Moreover, the transfer of the restricted shares will not be permitted between the date of final grant and the end of a two-year mandatory holding period, on July 20, 2009. To provide for the eventual final grant of these restricted shares, the Company purchased 574,000 previously issued shares, par value€10 per share, on the market at an average price of€206.49 per share, par value€10 per share, the equivalent of an average price of€51.62 per share, par value€2.50 per share.
(b)The number of restricted shares granted has been multiplied by four to take into account the four-for-one stock split approved by TOTAL shareholders’ meeting on May 12, 2006.
(c)Grant approved by the Board on July 18, 2006, pursuant to the authorization given by the shareholders’ meeting on May 17, 2005. These restricted shares, which the Company purchased on the market in 2006, were finally granted after a two-year vesting period (i.e., on July 19, 2008). The final grant was conditioned to fulfilling a performance condition. The Board of Directors on May 6, 2008, noticed that the acquisition rate, connected to the performance condition, amounted to 100%. Moreover, the transfer of the restricted shares will not be permitted until the end of a two-year mandatory holding period (i.e., from July 19, 2010).
(d)Grant approved by the Board on July 17, 2007, pursuant to the authorization given by the shareholders’ meeting on May 17, 2005. Grants of these restricted shares, which the Company purchased on the market in 2007, will become final, subject to performance conditions, after a two-year vesting period (i.e., on July 18, 2009). Moreover, the transfer of the restricted shares will not be permitted until the end of a two-year mandatory holding period (i.e., on July 18, 2011). To provide for the eventual final grant of these restricted shares, the Company purchased 2,387,355 previously issued shares at an average price of€61.49 per share.
(e)Shares granted on October 9, 2008, as decided by the Board at its meeting on September 9, 2008, pursuant to the authorization given by the shareholders’ meeting on May 16, 2008. Grants of these restricted shares, which the Company purchased on the market in 2008, will become final, subject to performance conditions after a two-year vesting period (i.e., on October 10, 2010). Moreover, the transfer of the restricted shares will not be permitted until the end of a two-year mandatory holding period (i.e., on October 10, 2012). To provide for the eventual final grant of these restricted shares, the Company purchased 2,800,000 previously issued shares at an average price of€41.63 per share.
(f)The date of the award is the date of the Board meeting awarding the restricted share grant, except for the restricted shares awarded on October 9, 2008, decided by the Board on September 9, 2008.
(g)The closing price for TOTAL shares on July 19, 2005 (€208.50) has been divided by four in order to take into account the four-for-one stock split. The average repurchase price per share in 2005 (€206.49) has also been divided by four.
(h)The Chairman of the Board was not granted restricted shares by the Board meetings on July 19, 2005, July 18, 2006, July 17, 2007, and September 9, 2008. Furthermore, Mr. Christophe de Margerie, Director of TOTAL S.A. since May 12, 2006 and Chief Executive Officer of TOTAL S.A. since February 13, 2007, was not granted restricted shares by the Board meetings of July 18, 2006, July 17, 2007, and September 9, 2008. The Chief Executive Officer was finally granted on July 20, 2007, the 2,000 restricted shares he had been granted by the Board meeting of July 19, 2005, date at which he was not a director of TOTAL S.A. Mr. Daniel Boeuf, the director of TOTAL S.A. representing employee shareholders, was finally granted on July 19, 2008, the 416 shares he had been granted by the July 18, 2006, Board meeting, and was granted 588 restricted shares by the September 9, 2008, Board meeting.
(i)Employees of TOTAL S.A., or of any Group company, who were not directors of TOTAL S.A. as of the date of grant.
(j)For the 2007 Plan, final grants following the death of the beneficiary.
(k)Final restricted share grants for which entitlement right had been cancelled erroneously.

In case of a final award of the outstanding restricted shares as of December 31, 2008, the corresponding shares would represent 0.21%(1) of the Company’s potential share capital as of such date.

(1)Out of a total potential share capital of 2,415,383,826 shares, including 2,371,808,074 existing shares as of December 31, 2008, 42,965,666 shares that could be issued through the exercise of stock options awarded by the Company and 610,086 new shares that could be issued through the exercise of Elf Aquitaine options that benefit from exchange rights for TOTAL shares.

RESTRICTED SHARE GRANTS TO THE TEN EMPLOYEES (OTHER THAN DIRECTORS) RECEIVING THE LARGEST AMOUNT OF GRANTS/RESTRICTED SHARES FINALLY GRANTED TO THE TEN EMPLOYEES (OTHER THAN DIRECTORS AT THE TIME) RECEIVING THE MOST SHARES

Restricted share
grants/Shares
finally granted		Date of the awardDate of the final grantEnd of the holding
period

TOTAL restricted share grants decided by the Board meeting of September 9, 2008 to the ten employees (other than directors) receiving the largest amount of grants(a)

20,00010/09/200810/10/201010/10/2012

TOTAL restricted shares finally granted in 2008, following the decision by the Board meeting of July 18, 2006, to the ten employees (other than directors at the time) receiving the largest amount of shares(b)

20,00007/18/200607/19/200807/19/2010

(a)Shares granted on October 9, 2008, as decided by the Board at its meeting on September 9, 2008, pursuant to the authorization given by the shareholders’ meeting on May 16, 2008. Grants of these restricted shares, which the Company purchased on the market in 2008, will become final, subject to performance conditions after a two-year vesting period (i.e., on October 10, 2010). Moreover, the transfer of the restricted shares will not be permitted until the end of a two-year mandatory holding period (i.e., on October 10, 2012).
(b)Grant approved by the Board on July 18, 2006, pursuant to the authorization given by the shareholders’ meeting on May 17, 2005. These restricted shares, which the Company purchased on the market in 2006, were finally granted after a two-year vesting period (i.e., on July 19, 2008). The final grant was conditioned to fulfilling a performance condition. The Board of Directors on May 6, 2008, noticed that the acquisition rate, connected to the performance condition, amounted to 100%. Moreover, the transfer of the restricted shares will not be permitted until the end of a two-year mandatory holding period (i.e., from July 19, 2010).

Elf Aquitaine share subscription options

ELF AQUITAINE STOCK OPTIONS OF EXECUTIVE OFFICERS (MEMBERS OF THE MANAGEMENT COMMITTEE AND THE TREASURER AS OF DECEMBER 31, 2008)

Certain executive officers of TOTAL as of December 31, 2008, who were previously with the Elf Aquitaine group hold Elf Aquitaine options that, upon exercise, benefit from exchange rights for TOTAL shares based upon the exchange ratio used in the public tender offer of TOTAL for Elf Aquitaine in 1999.

This exchange ratio was adjusted on May 22, 2006, as described in note (c) to the table below as well as Note 25 to the Consolidated Financial Statements included elsewhere herein.

Elf Aquitaine stock subscription plan1999 Plan No.1

Exercise price per Elf Aquitaine share (€)(a)

114.76

Expiration date

March 30, 2009

Options awarded

15,280

Adjustments for S.D.A. spin-off(b)

36

Options outstanding as of January 1, 2008

700

Options exercised in 2008

—  

Options outstanding as of December 31, 2008

700

Corresponding number of TOTAL shares, as of December 31, 2008, likely to be created pursuant to the exchange guarantee(c)

4,200

(a)Exercise price as of May 24, 2006. The exercise price for Elf Aquitaine share subscription options was adjusted to take into account the spin-off of S.D.A. (Société de Développement Arkema) by Elf Aquitaine. This adjustment consisted of multiplying the exercise price by 0.992769, effective as of May 24, 2006. Exercise prices prior to May 24, 2006, are shown in Note 25 to the Consolidated Financial Statements.
(b)Adjustments approved by the Board of Elf Aquitaine on March 10, 2006, pursuant to Articles 174-9, 174-12 and 174-13 of Decree No. 67-236 dated March 23, 1967, in effect at the time of this meeting as well as at the time of the shareholders’ meeting of Elf Aquitaine on May 10, 2006, related to the spin-off of S.D.A. The adjustments were made on May 22, 2006, and became effective on May 24, 2006.
(c)To take into account the spin-off of S.D.A. by Elf Aquitaine, the spin-off of Arkema by TOTAL S.A. and the four-for-one TOTAL stock split, on March 14, 2006 the Board of TOTAL S.A. approved an adjustment to the exchange ratio used under the exchange guarantee mentioned above. This exchange ratio was adjusted to become six TOTAL shares per each Elf Aquitaine share upon approval of the S.D.A. spin-off by the shareholders’ meeting of Elf Aquitaine on May 10, 2006, and of the Arkema spin-off as well as the four-for-one TOTAL stock split by the shareholders’ meeting of TOTAL S.A. on May 12, 2006.2011.

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 and 2009 are set forth in the table 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)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 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.

 

Major Shareholders

As of February 28, 2009,December 31, 2011, the holdings of the major shareholders were calculated based on 2,363,767,313 shares, representing 2,368,716,634 voting rights exercisable at Shareholders’ Meetings or 2,578,602,075 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.

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.

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 knowledge, Total Actionnariat France, an employee investment fund, heldShareholders’ 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 2.9%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 5.7%at any Shareholders’ Meeting that would be held until such shares are transferred again or returned.

Thresholds 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%, 1/3, 50%, 2/3, 90% or 95% of the share capital or voting rights(1) are crossed (Article L. 233-7 of the French Commercial Code), any individual or entity who directly or indirectly comes 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 fifteen days by registered mail with return receipt requested, and declare the number of securities held.

In case the shares above these thresholds are not declared, any undeclared shares held in excess of the threshold 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.

Legal threshold notifications in 2011

Société Générale reported that it had passed:

on May 6, 2011, above the thresholds of 5% of the share capital and the voting rights of the Company, and that it held after crossing the thresholds 6.86% of the share capital and 6.29% of the voting rights inof the Company. In addition, Frère-Bourgeois S.A. (mainly through Compagnie Nationale à Portefeuille)Company;

on May 25, 2011, below the thresholds of 5% of the share capital and the Desmarais family indirectly control Groupe Bruxelles Lambert. These parties have declared that, acting in concert, they hold 5.3%voting rights of the Company’s sharesCompany, and 5.4%that it held after crossing the thresholds 4.92% of the share capital and 4.50% of the voting rights. Neither Total Actionnariat France,rights of the 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 nor(CNP) and Groupe Bruxelles Lambert has(GBL), acting in concert, holds 5% or more of TOTAL’s share capital at year-end 2011(2).

In addition, two known shareholders held 5% or more of the voting rights different from other shareholdersexercisable at TOTAL Shareholders’ Meetings at year-end 2011:

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 Company havingvoting rights of TOTAL as of August 25, 2009 and held their127,149,464 TOTAL shares in registered form for over two years.representing 127,745,604 voting rights,i.e. 5.42% of the share capital and 5.0009% of the theoretical voting rights(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, 2011, 5.52% of the share capital representing 5.53% of the voting rights exercisable at Shareholders’ Meetings and 5.08% of the theoretical voting rights(3).

•

The collective investment fund (fonds commun de placement) “TOTAL ACTIONNARIAT FRANCE”:

To the Company’s knowledge, the collective investment fund (fonds commun de placement) “TOTAL ACTIONNARIAT FRANCE” held, as of December 31, 2011, 3.33% of the share capital representing 6.12% of the voting rights exercisable at a Shareholders’ Meeting and 5.62% of the theoretical voting rights(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 MarchDecember 31, 2009, there were 198,248,022 ADSs outstanding in2011, the United States, representing approximately 8.4%Company held 109,554,173 TOTAL shares either directly or through its indirect subsidiaries, which represented 4.63% of the total outstanding shares.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 is notheld 9,222,905 treasury shares as of December 31, 2011, representing 0.39% of the share capital, as of that date.

TOTAL shares held directly orby Group companies

As of December 31, 2011, Total Nucléaire, a Group company wholly-owned indirectly owned or controlled by another corporation, by any foreignTOTAL held 2,023,672 TOTAL shares. As of December 31, 2011,

government or by any other natural or legal person. TheFinancière Valorgest, Sogapar and Fingestval, indirect subsidiaries of Elf Aquitaine, held respectively 22,203,704, 4,104,000 and 71,999,892 TOTAL shares, representing a total of 98,307,596 TOTAL shares. As of December 31, 2011, the Company does not knowheld through its indirect subsidiaries, 4.24% of any arrangements that may, at a subsequent date, result in a change of control of TOTAL.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, 2007,2009, and ending on March 31, 2009.23, 2012.


 

ITEM 8. FINANCIAL INFORMATION

 

Consolidated Statements and other supplemental information

See pages F-1 through F-86 and S-1 through S-9F-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.

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.

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, pursuant toas 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 31thirty-one people, including 21twenty-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 restored.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 M€10 million endowment to the InNaBioSanté research foundation in the frameworkas part of the citysetting up of Toulouse’s project to create a cancer research center at the site.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 2006.2006; 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 rejected allAll 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 siteplant 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 is scheduled to lastlasted approximately four months. Furthermore,

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, receivedChairman 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 requestcross-appeal with respect to appearcivil charges.

The appeal proceedings before the court in the contextCourt of this trial.Appeal of Toulouse was completed on March 16, 2012. The decision is expected on September 24, 2012.

Pursuant to applicable French law, Grande Paroisse is presumed to bear sole responsibilityA compensation mechanism for the explosion as long as the cause of the explosion remains unknown. While awaiting the conclusion of the investigation, Grande Paroisse hasvictims was set up a compensation system for victims. At this stage,immediately following the estimateexplosion.€2.3 billion was paid for the compensation of all claims and related expenses amounts to 2.19 B€. This figure exceeds by 1.39 B€ Grande Paroisse’s insurance coverage for legal liability (capped at 0.8 B€).

After taking into account payments previously made and new claims in 2008, the provision for potential liability and complementary claims appearing in the Consolidated Balance Sheet stands at 256 M€ asamounts. As of December 31, 2008 (which includes2011, 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 increaseoil storage depot at Buncefield, north of 140 M€London. This depot was operated by Hertfordshire Oil Storage Limited (HOSL), a company in 2008), comparedwhich TOTAL’s UK subsidiary holds 60% and another oil group holds 40%.

The explosion caused injuries, most of which were minor injuries, to a provisionnumber of 134 M€ as of December 31, 2007.

Antitrust investigations

•

Following investigations into certain commercial practices in the chemicals industry in the United States, some subsidiaries of the Arkema(1) group are involved in civil liability lawsuits in the United States and Canada for violations of antitrust laws. TOTAL S.A. has been named in certain of these suits as the parent company.

In Europe, the European Commission commenced investigations in 2000, 2003 and 2004 into alleged anti-competitive practices involving certain products sold by Arkema. In January 2005, under one of these investigations, the European Commission fined Arkema 13.5 M€ and jointly fined Arkema and Elf Aquitaine 45 M€. Arkema and Elf Aquitaine have appealed these decisions to the Court of First Instance of the European Union.

The Commission notified Arkema, TOTAL S.A. and Elf Aquitaine of complaints concerning two other product lines in January and August 2005, respectively. Arkema has cooperated with the authorities in these procedures and investigations. In May 2006, the European Commission fined Arkema 78.7 M€ and 219.1 M€, as a result of, respectively, each of these two proceedings. Elf Aquitaine was held jointly and severally liable for, respectively, 65.1 M€ and 181.35 M€ of these fines while TOTAL S.A. was held jointly and severally liable, respectively, for 42 M€ and 140.4 M€. TOTAL S.A., Arkema and Elf Aquitaine have appealed these decisions to the Court of First Instance of the European Union.

Arkema and Elf Aquitaine received a statement of objections from the European Commission in August 2007 concerning alleged anti-competitive practices related to another line of chemical products. As a result, Arkema and Elf Aquitaine have been jointly and severally fined in an amount of 22.7 M€ and individually in an amount of 20.43 M€ for Arkema and 15.89 M€ for Elf Aquitaine. The companies concerned appealed this decision to the relevant European court.

Arkema and Elf Aquitaine received a statement of objections from the European Commission in March 2009 concerning alleged anti-competitive practices related to another line of chemical products. As of today, the Commission has not rendered a decision.

No facts have been alleged that would implicate TOTAL S.A. or Elf Aquitaine in the practices questioned in these proceedings, and the fines received are based solely on their status as parent companies.

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, as well as TOTAL S.A. and Elf Aquitaine.

(1)Arkema is used in this section to designate those companies of the Arkema group whose ultimate parent company is Arkema S.A., which became an independent company after being spun off from TOTAL S.A. in May 2006.

As part of the agreement relatingpeople and caused property damage to the spin-offdepot and the buildings and homes located nearby. The official Independent Investigation Board has indicated that the explosion was caused by the overflow of Arkema, TOTAL S.A. or certain other Group companies agreeda 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 grant Arkema guarantees for certain risks relatedcontest the decision. TOTAL’s UK subsidiary finally decided to antitrust proceedings arising

withdraw from events priorthis recourse due to the spin-off.settlement agreements reached in mid-February 2011.

These guarantees cover, for a period of ten years that began in 2006, 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 covering the risks related to anti-competition violations in Europe applies to amounts above a 176.5 M€ threshold.

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.

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.

The Group has recorded provisions amountingcarries insurance for damage to 85 M€its interests in itsthese 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, 2008 to cover2011, stands at€80 million after taking into account the risks mentioned above.payments previously made.

Moreover, as a result of investigations started by the European Commission in October 2002 concerning certain Refining & Marketing subsidiaries of the Group, Total Nederland N.V. and TOTAL S.A. received a statement of objections in October 2004. These proceedings resulted, in September 2006, in Total Nederland N.V. being fined 20.25 M€ and in TOTAL S.A. as its parent company being held jointly responsible for 13.5 M€ of this amount, although no facts implicating TOTAL S.A. in the practices under investigation were alleged. TOTAL S.A. and Total Nederland N.V. have appealed this decision to the Court of First Instance of the European Union.

In addition, in May 2007, Total France and TOTAL S.A. received a statement of objections regarding

alleged antitrust practices concerning another product line of the Refining & Marketing division. These proceedings resulted, in October 2008, in Total France being fined 128.2 M€ and in TOTAL S.A., as its parent company, being held jointly responsible although no facts implicating TOTAL S.A. in the practices under investigation were alleged. TOTAL S.A. and Total Raffinage & Marketing (the new corporate name of Total France) have appealed this decision to the Court of First Instance of the European Union.

Given the discretionary powers granted to the European Commission 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, theThe Group believes that, they willbased on the information currently available, on a reasonable estimate of its liability and on provisions recognized, this accident should not have a material adverse effectsignificant impact on itsthe Group’s financial conditionsituation 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, the subsidiary was fined £3.6 million and paid it. The decision takes into account a number of elements that have mitigated the impact of the charges brought against it.

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 instance of 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.selection, and ordering TOTAL S.A. was finedto pay a fine of€375,000. The courtCourt also ordered compensation to be paid to those affected by the victims of pollution from the Erika up to an aggregate amount of 192 M€,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 believes that the finding of negligence and the related conviction for marine pollution are without substance as a matter of fact and as a matter of law. TOTAL also considers that this verdict is contrary to the intended aim of enhancing maritime transport safety.

TOTAL has appealed the verdict of January 16, 2008. In the meantime, it has nevertheless proposed to pay third parties who so requestrequested definitive compensation as determined by the court. As of today, thirty-sixCourt. Forty-two third parties have received compensation payments, representingbeen compensated for an aggregate amount of 170.1 M€.171.5 million.

The hearing of the appeal beforeBy a decision dated March 30, 2010, the Court of AppealsAppeal of Paris is expectedupheld the lower Court verdict pursuant to beginwhich TOTAL S.A. was convicted of marine pollution and fined€375,000. 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 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 October 2009.

AtParis to third parties against Erika’s controlling and classification firm, the current stageship-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 proceedings, TOTAL S.A. believes that, based on a reasonable estimate of its liability, the case will not have a material impact on the Group’s financial situation or consolidated results.


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 is operated by Hertfordshire Oil Storage Limited (HOSL), a company in which the British subsidiary of TOTAL holds 60% and another oil group holds 40%.

The explosion caused minor injuries to a number of people and caused property damageIOPC Fund. Under this global settlement agreement, each party agreed to the depot andwithdrawal of all civil proceedings initiated against all other parties to 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 have not yet been settled, took place between October and December 2008. The Court’s decision of March 20, 2009, declared the British subsidiary of agreement.

TOTAL liable for the accident and solely liable for indemnifying the victims. TOTAL’s British subsidiary intends to appeal this decision.

The Group carries insurance for damage to its interests in these facilities, business interruption and civil liability claims from third parties, andS.A. believes that, based on the information currently available, this accidentthe case should not have a significant impact on the Group’s financial situation or consolidated results.

On December 1, 2008, the Health and Safety Executive (HSE)Blue Rapid and the Environment Agency (EA) issuedRussian Olympic Committee — Russian regions and Interneft

Blue Rapid, a Notice of prosecutionPanamanian company, and the Russian Olympic Committee filed a claim for damages with the Paris Commercial Court against five companies, including the BritishElf Aquitaine, alleging a so-called non-completion by a former subsidiary of TOTAL. An initial court hearing is expectedElf Aquitaine of a contract related to an exploration and production project in Russia negotiated in the second quarter 2009.

Myanmar

Underearly 1990s. Elf Aquitaine believed this claim to be unfounded and opposed it. On January 12, 2009, the Belgian “universal jurisdiction” lawsCommercial Court of June 16, 1993Paris rejected Blue Rapid’s claim against Elf Aquitaine and February 10, 1999, a complaint was filedfound that the Russian Olympic Committee did not have standing in Belgium on April 25, 2002, against the Company, its Chairmanmatter. Blue Rapid and the former president of its subsidiary in Myanmar. These laws were repealed by the Belgian law of August 5, 2003 on “serious violations of international human rights”, which also provided a procedure for terminating certain proceedings that were underway. InRussian Olympic Committee appealed this framework, the BelgianCour de cassation terminated the proceedings against TOTAL in a decision dateddecision. On June 29, 2005. The plaintiffs’ request to withdraw this decision was rejected by theCour de cassation on 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, 2011, the Court of Appeal of Brussels. 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 its decision of March 5, 2008,connection with the Court of Appeal confirmedsame 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 Chairman the 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 have appealed the decision of March 5, 2008. On October 29, 2008, theCour de cassation rejected 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 Africa

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 SECUnited States Securities and Exchange Commission (SEC) followed by the Department of Justice (DoJ) issued a non-public formal order directing a privatean investigation in the matter of certain oil companies (including, among others, TOTAL), in connection with the pursuit of business in Iran.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 2006,2010, the Company opened talks with U.S. authorities, without any acknowledgement of facts, to consider an out-of-court settlement as it is often the case in this kind of proceeding.

Late in 2011, the SEC and the DoJ proposed to 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 affair, a parallel judicial inquiry related to TOTAL was initiated in France.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 inquiry concerns an agreement concluded by the Group that relates to the South Pars gas field and allegations that certain payments were made under this agreement to Iranian officials in connection with contracts entered into between the Group and the National Iranian Oil Company (NIOC). The Company has not been notified of any significant developments in the proceedings since the formal investigation was launched. The Company believes that the negotiation and execution of the agreement did not violate any applicable laws or applicable international conventions. However,

At this point, the Company cannot excludedetermine when these investigations will terminate, and cannot predict their results, or the possibilityoutcome of the talks that additional procedures may be initiatedhave been initiated. Resolving these cases is not expected to have a significant impact on the Group’s financial situation or consequences 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 respect to this matter.non-public investigation.


Italy

As part of an investigation led by the Prosecutor of the Republic of the Potenza court, Total Italia is the subject of an investigation related to certain calls for tenders that it 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 investigating judge of Potenza served notice to Total Italia of a decision that would suspend the concession for this field for one year.

Total Italia is contesting the allegations and has appealed the decision by the preliminary investigation judge to the court of appeals of Potenza.

Oil-for-Food Program

Several countries have commencedlaunched 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 presidentPresident 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’sProsecutor’s office. The prosecutor’sIn 2009, the Prosecutor’s office must now submitrecommended to the investigating judge itsthat 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 whether orbribery 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 pursuesend the case.case to trial. The hearings are expected in the first quarter of 2013.

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.

Blue RapidItaly

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 Russian Olympic Committee

Blue Rapid,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 Panamanian company, andpreliminary measure before the Russian Olympic Committee filed a claim for damages withproceedings go before the Court, the preliminary investigation judge of Potenza served notice to Total Italia

Paris Commercialof 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 against Elf Aquitaine concerning its withdrawal from anof 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 proceedings before the Judge of the preliminary hearing are still pending.

In 2010, Total Italia’s exploration and production project in Russia that was negotiated early in the 1990s.

Elf Aquitaine believes this claimoperations were transferred to be unfounded.

On January 12, 2009, the Commercial CourtTotal E&P Italia and refining and marketing operations were merged with those of Paris rejected Blue Rapid’s claim and found that the Russian Olympic Committee did not have standing in the matter. This decision has been appealed.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’shareholders at the annual shareholders’ meeting.Shareholders’ Meeting.

ForUntil the 2008 fiscal year,payment of the Board2010 dividend, the Company paid an interim dividend in November and the remainder after the Shareholders’ Meeting held in May of Directors has proposed a dividend of€2.28 per share. This proposed dividend will be voted on by the shareholders’ meeting to be held on May 15, 2009. Aneach year. Consequently, for 2010, an interim dividend of€1.14 per share was paid on November 19, 2008. If approved,and the balanceremainder of€1.14 per share will bewere paid respectively on November 17, 2010 and May 26, 2011.

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, 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;

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 22, 2009.11, 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 2012 should be as follows:

•

1st interim dividend: September 24, 2012;

•

2nd interim dividend: December 17, 2012;

•

3rd interim dividend: March 18, 2013;

remainder: June 24, 2013.

The provisional ex-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

For a 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 20092012 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). 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 50fifty 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 50fifty 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’s four-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 

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  

 

Price per share (€)  High  Low  High adjusted  Low adjusted

2004

  42.95  34.85  42.40  34.40

2005

  57.28  39.50  56.54  38.99

2006

  58.15  46.52  57.40  46.52

2007

  63.40  48.33  —    —  

First Quarter

  55.45  48.33  —    —  

Second Quarter

  60.31  52.05  —    —  

Third Quarter

  63.40  50.52  —    —  

Fourth Quarter

  57.98  53.00  —    —  

2008

  59.50  31.52  —    —  

First Quarter

  59.50  45.45  —    —  

Second Quarter

  58.25  46.35  —    —  

Third Quarter

  54.24  40.50  —    —  

Fourth Quarter

  44.55  31.52  —    —  

October

  43.90  31.52  —    —  

November

  44.55  36.115  —    —  

December

  42.00  35.44  —    —  

2009 (through March 31)

  42.465  34.25  —    —  

First Quarter

  42.465  34.25  —    —  

January

  42.465  34.35  —    —  

February

  42.185  36.64  —    —  

March

  39.42  34.25  —    —  

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 the four-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 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

2004

  55.28    43.88  54.39  43.17

2005

  68.97    51.87  67.86  51.03

2006

  73.46    58.06  73.46  58.06
Price per ADR ($)  High   Low 

2007

  87.34    63.89  —    —     87.34     63.89  

2008

   91.34     42.60  

2009

   65.98     42.88  

2010

   67.52     43.07  

First Quarter

  72.65    63.89  —    —     67.52     54.01  

Second Quarter

  81.55    69.57  —    —     60.24     43.07  

Third Quarter

  87.34    68.01  —    —     54.14     44.43  

Fourth Quarter

  84.46    76.66  —    —     58.06     48.08  

2008

  91.34    42.60  —    —  

2011

   64.44     40.00  

First Quarter

  86.90    67.11  —    —     62.31     52.61  

Second Quarter

  91.34    73.09  —    —     64.44     53.04  

Third Quarter

  83.99    57.19  —    —     58.25     40.00  

September

   49.79     40.00  

Fourth Quarter

  60.90    42.60  —    —     55.93     41.85  

October

  60.90    42.60  —    —     55.93     41.85  

November

  58.17    43.93  —    —     52.89     46.72  

December

  60.19    44.90  —    —     52.46     47.00  

2009 (through March 31)

  57.85    42.88  —    —  

First Quarter

  57.85    42.88  —    —  

2012 (through February 29)

   57.06     48.82  

January

  57.85    44.73  —    —     53.41     48.82  

February

  55.09    46.35  —    —     57.06     53.01  

March

  53.32    42.88  —    —  

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 (the Company’s bylaws)). 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. TheIn addition, the Board may also grant its Chairman compensation in addition to attendance fees.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 70seventy 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 person may not continue in office beyond their 70thseventieth birthday.

Currently, the duties of the Chairman of the Board automatically cease on his 65thsixty-fifth birthday at the latest. At itstheir meeting of February 11,May 15, 2009, the Board resolved to propose to the shareholders’ meeting to be held on May 15, 2009,shareholders adopted an amendment of the bylaws pertaining to the rules relating to the nomination of the Chairman. The amendment will allowallows the Board, as an exception to the currently applicable 65-yearsixty-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 65sixty-five years old but less than 70seventy years old.

Shareholdings

Each director must own at least 1,000 shares of TOTAL during his or her term of office.office, except the director representing the employees shareholder who shall hold, either individually or through an investment trust governed by Article L.214-40 of the Monetary & Financial Code

(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 thestatuts 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 thestatuts 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’sstatuts. 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’sstatuts 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. Thestatuts bylaws provide that the remaindershareholders’ meeting held to approve the financial statements for the financial year may decide to grant an option to each shareholder between payment of any distributable profits shall be distributed among the shareholders in the form of dividends, eitherdividend in cash and payment in shares with respect to all or in shares.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 Company Law,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.

EachAccording 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.


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 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’sstatuts, 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.

TheseAccording 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, TOTAL S.A.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 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.

Holding of shares

Under French Company Law concerningand 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 24twenty-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

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.

Other Issues

Share capital history

Fiscal 2009

July 30, 2009

Reduction of the share capital from€5,929,520,185 to€5,867,520,185, through the cancellation of 24,800,000 treasury shares, par value€2.50.

January 1, 2010

Certification of the issuance of 1,414,810 new shares, par value€2.50 per share, between January 1 and December 31, 2009, raising the share capital by€3,537,025 from€5,867,520,185 to€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, 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 from€5,871,057,210 to€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’ meetingsMeeting 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

Delegation 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’sstatuts, 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 35thirty-five days prior to the meeting (or 15fifteen 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. Within 10 days of publication, one

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.resolutions to be submitted to a shareholders’ vote and/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 Company is subject to a tender offer and the Company calls a shareholders’ meeting to approve measures 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 resolutions and/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 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 15fifteen 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 sixten 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)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. NoEach shareholder may delegate voting authority to another person exceptshareholder, the shareholder’s spouse, or another shareholder or, ifthe companion with whom the shareholder is nothas registered a resident of France, bycivil 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 registered intermediary in conformity with applicable regulations.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.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 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’sstatuts, 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 in paragraph 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 voteown securities of the Company, either under French Company Law or under thestatuts 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%, 33 1/30%, 1/3,%, 50%, 66 2/2/3,%, 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 fivefour 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 fivefour 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 theAutorité des marchés financiers. In addition, every shareholder who, directly or indirectly, acting alone or in concert with others, acquires ownership or control of shares representing 10% or 20% of the Company’s share capital must notify the Company and theAutorité des marchés financiersof its intentions for the 12 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 this 10% or 20% 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. AMF.

In addition, the Company’sstatuts 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 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 33 1/1/3% 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 31, 2006.23, 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.


(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.

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;

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 5%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”) as currently in effect.. These laws, regulations and the Treaty are subject to change, possibly on a retroactive basis.

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-called “Non Cooperative Countries and Territories” within the meaning of Section 238-0 A of the French Tax Code.

Holders are urged to consult their own tax advisoradvisors 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 dividends

Taxation of Dividends

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 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%. As a result of the 2008 French Finance Law, thisThis withholding tax is reduced to 18%21% with respect to dividends distributed toreceived as from January 1, 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.


Residents of France who are individuals and who receive dividends are taxed on 60% of the amount of the dividends received. In addition, French resident shareholders who are individuals are entitled to a tax credit (Crédit d’impôt) equal to 50% of the amount of dividends received but with an overall annual cap of€230 or, as the case may be,€115 depending on the marital status of the individual holder. In addition, residents of France may instead opt for a withholding tax equal to 18% of the dividends received and, in such a case, will not be eligible for the receipt ofCrédit d’impôt.

Under French domestic law, shareholders who are not residents of France for tax purposes are not eligible to the benefit of theCrédit d’impôt. However, U.S. Holders who benefit from the Treaty may be entitled to the refund of theCrédit d’impôt(less applicable withholding tax). Please note that the French tax authorities have not yet provided for the procedure of refund of such credit.

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 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 on forms No. 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. However, it will not be paid before January 15 of the year following the year in which the dividend was paid.

Copies of forms 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, and obtain, in respect to dividend distributions made to U.S. Holders who are individuals, the refund of theCrédit d’impôt (less applicable withholding tax), in accordance with the procedures established by the French tax authorities.TOTAL. To effect such benefit recovery and/or refund,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 isare 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 plus any amount of theCrédit d’impôt described above (see “— French Taxes” above) transferred to the U.S. Holder with respect to this amount (including any French tax withheld with respect to the distribution made by TOTAL and theCrédit d’impôt) 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, 20112013, 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 the 121-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 dollar/euroeuro/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 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 and the relatedCrédit d’impôt payments paid in taxable years beginning before January 1, 2007 generally will constitute “passive income”, or, in the case of certain U.S. Holders, “financial services income”, and dividends paid in taxable years beginning after December 31, 2006 will constitute “passive income”, or, in the case of certain U.S. Holders, “general income”, which in either case, isare treated separately from other types of incomeone another for purposes of computing the foreign tax credit


allowable to the U.SU.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 that is recognized in taxable years beginning before January 1, 2011 is generally

taxed at a maximum rate of 15%.preferential rates. The deductibility of capital losses is subject to limitation.

Passive Foreign Investment Statusforeign investment status

TOTAL believes that the Sharesshares 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 a mark-to-market basis with respect to the Sharesshares or ADSs, gain realized on the sale or other disposition of the Sharesshares 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 Sharesshares 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 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 per cent25% 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 Securities and Exchange Commission’sSEC’s public reference rooms by


calling the Securities and Exchange CommissionSEC for more information at 1-800-SEC-0330. All of TOTAL’s Securities and Exchange CommissionSEC filings made after December 31, 2001, are available to the public at the Securities and Exchange Commission webSEC Web site at http://www.sec.gov and from certain commercial

document retrieval services. You may also read and copyinspect any document the Company files with the Securities and Exchange CommissionSEC 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 NoteNotes 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 caps, floors 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

Not applicable.American Depositary Receipts fees and charges

The Bank of New York Mellon, as a depositary, collects its fees for delivery and surrender of ADRs directly from investors depositing shares or surrendering ADRs 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.

Investors must pay:For:
$5.00 (or less) per 100 ADSs (or portion of 100 ADSs)

•     Issuance of ADRs, including issuances resulting from a distribution of shares or rights or other property, stocks splits or merger

•     Cancellation of ADRs 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, standard out-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’s Form 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, 2011 to March 15, 2012, the Company received from the depositary a payment of $3,327,796.00 with respect to certain Reimbursed Expenses.

ITEM 13. DEFAULTS, DIVIDEND ARREARAGES AND DELINQUENCIES

None.

ITEM 14. MATERIAL MODIFICATIONS TO THE RIGHTS OF

SECURITY HOLDERS AND USE OF PROCEEDS

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, 2008.2011.

The effectiveness of internal control over financial reporting as of December 31, 2008,2011, was audited by KPMG S.A. and Ernst & Young Audit, independent registered public accounting firms, as stated in their report beginning on page 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. Antoine Jeancourt-Galignani

Ms. Patricia Barbizet is the Audit Committee financial expert. Mr. Jeancourt-GalignaniMs. 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.

ITEM 16C. PRINCIPAL ACCOUNTANT FEES AND SERVICES

During the fiscal years ended December 31, 20082011 and 2007,2010, fees for services provided by Ernst & Young Audit and KPMG were as follows:

 

  KPMG

Year Ended December 31,

  Ernst & Young Audit

Year Ended December 31,

  

KPMG

Year Ended December 31,

   

Ernst & Young Audit

Year Ended December 31,

 
(M€)  2008  2007  2008  2007  2011   2010   2011   2010 

Audit Fees

  15.9  15.7  17.7  17.3   14.1     15.1     15.6     15.2  

Audit-Related Fees(a)

  3.4  2.6  1.0  0.7   3.8     3.6     1.9     0.7  

Tax Fees(b)

  1.2  1.2  1.8  1.7   1.6     1.2     1.4     1.7  

All Other Fees(c)

  0.2  0.2  0.0  0.1   0.2     0.1     0.2     0.2  

Total

  20.7  19.7  20.5  19.8   19.7     20.0     19.1     17.8  

 

(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.pre-approved and that are not prohibited by regulatory or other professional requirements. This policy provides for both general 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 a case-by-case basis. The Audit Committee reviews on an

annual basis the services provided by the statutory auditors. During 2008,2011, 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) of Rule 2-01 of Regulation S-X.


 

ITEM 16D. EXEMPTIONS FROM THE LISTING STANDARDS FOR AUDIT COMMITTEES

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

  

Maximum Number
Of Shares That May
Yet Be Purchased

Under The Plans Or
Programs(c)

January 2008

  4,100,000  51.39  4,100,000(b) 84,436,108

February 2008

  1,624,000  50.01  1,624,000(b) 82,881,230

March 2008

  3,276,000  47,80  3,276,000(a) 79,659,940

April 2008

  1,250,000  49.12  1,250,000(a) 79,254,626

May 2008

  1,868,000  54.85  1,868,000(a)(b) 78,708,334

June 2008

  3,882,000  52.97  3,882,000(b) 75,379,616

July 2008

  2,120,000  50.65  2,120,000(b) 103,468,536

August 2008

  2,198,500  48.16  2,198,500(b) 101,316,940

September 2008

  3,681,500  44.10  3,681,500(b) 97,660,059

October 2008

  3,600,000  40.32  3,600,000(b) 94,063,057

November 2008

  —    —    —    94,074,937

December 2008

  —    —    —    94,098,712

January 2009

  —    —    —    94,103,139

February 2009

  —    —    —    94,121,817
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)

January 2011

———122,526,633

February 2011

———122,588,776

March 2011

———122,626,999

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)SinceThe shareholders’ meeting of May 14, 2007:13, 2011, cancelled and replaced the previous resolution from the shareholders’ meeting of May 11, 2007, authorized21, 2010, authorizing the Board of Directors to trade in the company’sCompany’s own shares on the market for a period of 18 months within the framework of the sharestock 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. Under this authorization, 35,615,355 shares have been repurchased from May 14, 2007 to May 16, 2008.
(b)Since May 19, 2008: the shareholders’ meeting of May 16, 2008, cancelled and replaced the previous resolution from the shareholders’ meeting of May 11, 2007, 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 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. Under this authorization, 16,422,000 shares have been repurchased from May 19, 2008 to February 28, 2009, including 2,800,000 shares that were purchased to cover restricted share grants to Group employees.
(c)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.

ITEM 16G. CORPORATE GOVERNANCE

 

Summary of Significant Differences between French Corporate Governance Practices and the NYSE’s Corporate Governance Standards

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) and, the French Financial and Monetary Code (Code monétaire et financier), both as amended inter alia in August 2003 from time to time, and the regulations and recommendations provided by the French Financial Security ActMarkets Authority (Loi de sécurité financièreAutorité des)marchés 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, andbelow. Under French law, the functions of board chairman and chief executive officer are frequentlymay 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 considersat its meeting on February 9, 2012, examined the independence of the Company’s directors as of December 31, 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. de Margerie, Chief Executive Officer of the Company, Mr. Boeuf, theClément, director representing employee shareholders,shareholders.

Representation of women on corporate boards

The FrenchJournal Officielpublished 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.

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 two years (following the first ordinary shareholders’ meeting held after January 1, 2014), and Mrs. Lauvergeon, CEO(ii) at least 40% within five 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 five-year period should not be higher than two. Any appointment of a companydirector made in violation of which Mr. Desmarest sits onthese rules shall be declared null and void and the board.payment of the directors’ compensation shall be suspended until the board composition complies with the law’s 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 to non-U.S. listed companies, such as TOTAL.

French law requires the board of directors of companies listed in France either to establish an audit committee or to perform itself(Article L. 823-19 of the functions of an audit committee. If the board appoints an audit committee,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, 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, reviewingmonitoring the process for the preparation of financial statements,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 shareholdersshareholders’ 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.

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.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. The certification must be disclosed in the company’s annual report to shareholders.

French law requires neither the adoption of such guidelines nor the publicationprovision of such certifications.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 in November 2006,early 2012 without the assistance of 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, 2008, 20072011, 2010 and 20062009

  F-3

Consolidated Statement of Comprehensive Income for the Years Ended December 31, 2011, 2010 and 2009

F-4

Consolidated Balance Sheet at December 31, 2008, 20072011, 2010 and 20062009

  F-4F-5

Consolidated Statement of Cash Flow for the Years Ended December 31, 2008, 20072011, 2010 and 20062009

  F-5F-6

Consolidated Statement of Changes in Shareholders’ Equity for the years endedYears Ended December  31, 2008, 20072011, 2010 and 20062009

  F-6F-7

Notes to the Consolidated Financial Statements

  F-7F-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.

ITEM 19. EXHIBITS

The following documents are filed as part of this annual report:

 

1.

1

  Bylaws (Statuts) of TOTAL S.A. (as amended through December 31, 2008)2011)
8.

8

  List of Subsidiaries (see Note 35 to the Consolidated Financial Statements included in this Annual Report)
11.

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.

SIGNATURE

The registrant hereby certifies that it meets all of the requirements for filing on Form 20-F and that it has duly caused and authorized the undersigned to sign this annual report on its behalf.

 

TOTAL S.A.

By:

 

/s/ CHRISTOPHEDE MARGERIE

 Name: Christophe de Margerie
 Title: Chairman and Chief Executive Officer

Date: April 3, 2009March 26, 2012

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRMS

ON THE CONSOLIDATED FINANCIAL STATEMENTS

Year ended December 31, 20082011

The Board of Directors and Shareholders

TOTAL S.A.

We have audited the accompanying consolidated balance sheets of TOTAL S.A. and subsidiaries (the “Company”) as of December 31, 2008, 20072011, 2010 and 2006,2009, 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, 2008.2011. 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 atas of December 31, 2008, 20072011, 2010 and 2006,2009, and the consolidated results of its operations and its consolidated cash flows for each of the three years in the period ended December 31, 2008,2011, 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.

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, 2008,2011, 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 April 2, 2009March 7, 2012 expressed an unqualified opinion on the effectiveness of the Company’s internal control over financial reporting.

Paris-LaParis La Défense, France

April 2, 2009March 7, 2012

 

KPMG AUDITAudit

A division of KPMG S.A.

  ERNST & YOUNG Audit
A division of KPMG S.A.

/s/    JAY NIRSIMLOO

  

/s/    PS/    GABRIELASCAL GMALET        ACIOCE

/s/    LAURENT VITSE

Jay NirsimlooPascal MacioceLaurent Vitse
Partner  /S/    PHILIPPE DIU        
/S/    RENÉ AMIRKHANIAN        Partner  Gabriel GaletPhilippe Diu
René AmirkhanianPartner

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRMS

ON THE INTERNAL CONTROL OVER FINANCIAL REPORTING

Year ended December 31, 20082011

The Board of Directors and Shareholders

TOTAL S.A.

We have audited TOTAL S.A. and subsidiaries’ (“the Company”) internal control over financial reporting as of December 31, 2008,2011, based on criteria established in Internal Control-IntegratedControl - 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, 2008,2011, 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, 2008, 20072011, 2010 and 20062009 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, 2008,2011, and our report dated April 2, 2009March 7, 2012 expressed an unqualified opinion on those consolidated financial statements.

Paris-La-DéParis La Défense, France

April 2, 2009March 7, 2012

 

KPMG AUDITAudit

A division of KPMG S.A.

  ERNST & YOUNG Audit
A division of KPMG S.A.

/s/    JAY NIRSIMLOO

  

/s/    PS/    GABRIELASCAL GMALET        ACIOCE

/s/    LAURENT VITSE

Jay NirsimlooPascal MacioceLaurent Vitse
Partner  /S/    PHILIPPE DIU        
/S/    RENÉ AMIRKHANIAN        Partner  Gabriel GaletPhilippe Diu
René AmirkhanianPartner

CONSOLIDATED STATEMENT OF INCOME

 

TOTAL

 

For the year ended December 31,(M€)(a)

   2008  2007  2006      2011 2010 2009 

Sales

  (Notes 4 & 5) 179,976  158,752  153,802    (Notes 4 & 5)   184,693    159,269    131,327  

Excise taxes

   (19,645) (21,928) (21,113)    (18,143)   (18,793)   (19,174) 

Revenues from sales

   160,331  136,824  132,689     166,550    140,476    112,153  

Purchases net of inventory variation

  (Note 6) (111,024) (87,807) (83,334)   (Note 6)   (113,892)   (93,171)   (71,058) 

Other operating expenses

  (Note 6) (19,101) (17,414) (19,536)   (Note 6)   (19,843)   (19,135)   (18,591) 

Exploration costs

  (Note 6) (764) (877) (634)   (Note 6)   (1,019)   (864)   (698) 

Depreciation, depletion and amortization of tangible assets and mineral interests

   (5,755) (5,425) (5,055)    (7,506)   (8,421)   (6,682) 

Other income

  (Note 7) 369  674  789    (Note 7)   1,946    1,396    314  

Other expense

  (Note 7) (554) (470) (703)   (Note 7)   (1,247)   (900)   (600) 

Financial interest on debt

   (1,000) (1,783) (1,731)    (713)   (465)   (530) 

Financial income from marketable securities & cash equivalents

   473  1,244  1,367     273    131    132  

Cost of net debt

  (Note 29) (527) (539) (364)   (Note 29)   (440)   (334)   (398) 

Other financial income

  (Note 8) 728  643  592    (Note 8)   609    442    643  

Other financial expense

  (Note 8) (325) (274) (277)   (Note 8)   (429)   (407)   (345) 

Equity in income (loss) of affiliates

  (Note 12) 1,721  1,775  1,693    (Note 12)   1,925    1,953    1,642  

Income taxes

  (Note 9) (14,146) (13,575) (13,720)   (Note 9)   (14,073)   (10,228)   (7,751) 

Net income from continuing operations (Group without Arkema)

   10,953  13,535  12,140 

Net income from discontinued operations (Arkema)

  (Note 34) —    —    (5)

Consolidated net income

   10,953  13,535  12,135     12,581    10,807    8,629  

Group share

   10,590  13,181  11,768     12,276    10,571    8,447  

Minority interests

   363  354  367 

Earnings per share (€)(b)

   4.74  5.84  5.13 

Fully-diluted earnings per share (€)(b)

   4.71  5.80  5.09 

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)

Except for per share amounts.

(b)The earnings per share from continuing and discontinued operations are disclosed in Note 34 to the Consolidated Financial Statements.

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

TOTAL

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€)   2008 2007 2006      2011 2010 2009 

ASSETS

          

Non-current assets

          

Intangible assets, net

  (Notes 5 & 10) 5,341  4,650  4,705    (Notes 5 & 10)   12,413    8,917    7,514  

Property, plant and equipment, net

  (Notes 5 & 11) 46,142  41,467  40,576    (Notes 5 & 11)   64,457    54,964    51,590  

Equity affiliates: investments and loans

  (Note 12) 14,668  15,280  13,331    (Note 12)   12,995    11,516    13,624  

Other investments

  (Note 13) 1,165  1,291  1,250    (Note 13)   3,674    4,590    1,162  

Hedging instruments of non-current financial debt

  (Note 20) 892  460  486    (Note 20)   1,976    1,870    1,025  

Other non-current assets

  (Note 14) 3,044  2,155  2,088    (Note 14)   4,871    3,655    3,081  

Total non-current assets

Total non-current assets

 71,252  65,303  62,436     100,386    85,512    77,996  

Current assets

          

Inventories, net

  (Note 15) 9,621  13,851  11,746    (Note 15)   18,122    15,600    13,867  

Accounts receivable, net

  (Note 16) 15,287  19,129  17,393    (Note 16)   20,049    18,159    15,719  

Other current assets

  (Note 16) 9,642  8,006  7,247    (Note 16)   10,767    7,483    8,198  

Current financial assets

  (Note 20) 187  1,264  3,908    (Note 20)   700    1,205    311  

Cash and cash equivalents

  (Note 27) 12,321  5,988  2,493    (Note 27)   14,025    14,489    11,662  

Total current assets

   47,058  48,238  42,787     63,663    56,936    49,757  

Assets classified as held for sale

   (Note 34)   —    1,270    —  

Total assets

   118,310  113,541  105,223     164,049    143,718    127,753  

LIABILITIES & SHAREHOLDERS’ EQUITY

          

Shareholders’ equity

          

Common shares

   5,930  5,989  6,064     5,909    5,874    5,871  

Paid-in surplus and retained earnings

   52,947  48,797  41,460     66,506    60,538    55,372  

Currency translation adjustment

   (4,876) (4,396) (1,383)    (988)   (2,495)   (5,069) 

Treasury shares

   (5,009) (5,532) (5,820)    (3,390)   (3,503)   (3,622) 

Total shareholders’ equity - Group share

  (Note 17) 48,992  44,858  40,321 

Minority interests

   958  842  827 

Total shareholders’ equity — Group share

   (Note 17)   68,037    60,414    52,552  

Non-controlling interests

    1,352    857    987  

Total shareholders’ equity

   49,950  45,700  41,148     69,389    61,271    53,539  

Non-current liabilities

          

Deferred income taxes

  (Note 9) 7,973  7,933  7,139    (Note 9)   12,260    9,947    8,948  

Employee benefits

  (Note 18) 2,011  2,527  2,773    (Note 18)   2,232    2,171    2,040  

Provisions and other non-current liabilities

  (Note 19) 7,858  6,843  6,467    (Note 19)   10,909    9,098    9,381  

Non-current financial debt

   (Note 20)   22,557    20,783    19,437  

Total non-current liabilities

   17,842  17,303  16,379     47,958    41,999    39,806  

Non-current financial debt

  (Note 20) 16,191  14,876  14,174 

Current liabilities

          

Accounts payable

   14,815  18,183  15,080     22,086    18,450    15,383  

Other creditors and accrued liabilities

  (Note 21) 11,632  12,806  12,509    (Note 21)   14,774    11,989    11,908  

Current borrowings

  (Note 20) 7,722  4,613  5,858    (Note 20)   9,675    9,653    6,994  

Other current financial liabilities

  (Note 20) 158  60  75    (Note 20)   167    159    123  

Total current liabilities

   34,327  35,662  33,522     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

   118,310  113,541  105,223     164,049    143,718    127,753  

CONSOLIDATED STATEMENT OF CASH FLOW

 

TOTAL

(Note 27)

(Note 27)

    

For the year ended December 31,(M€)

  2008  2007  2006 

CASH FLOW FROM OPERATING ACTIVITIES

    

Consolidated net income

  10,953  13,535  12,135 

Depreciation, depletion and amortization

  6,197  5,946  5,555 

Non-current liabilities, valuation allowances, and deferred taxes

  (150) 826  601 

Impact of coverage of pension benefit plans

  (505) —    (179)

(Gains) losses on disposals of assets

  (257) (639) (789)

Undistributed affiliates’ equity earnings

  (311) (821) (952)

(Increase) decrease in working capital

  2,571  (1,476) (441)

Other changes, net

  171  315  131 

Cash flow from operating activities

  18,669  17,686  16,061 

CASH FLOW USED IN INVESTING ACTIVITIES

    

Intangible assets and property, plant and equipment additions

  (11,861) (10,549) (9,910)

Acquisitions of subsidiaries, net of cash acquired

  (559) (20) (127)

Investments in equity affiliates and other securities

  (416) (351) (402)

Increase in non-current loans

  (804) (802) (1,413)

Total expenditures

  (13,640) (11,722) (11,852)

Proceeds from disposal of intangible assets and property, plant and equipment

  130  569  413 

Proceeds from disposal of subsidiaries, net of cash sold

  88  5  18 

Proceeds from disposal of non-current investments

  1,233  527  699 

Repayment of non-current loans

  1,134  455  1,148 

Total divestments

  2,585  1,556  2,278 

Cash flow used in investing activities

  (11,055) (10,166) (9,574)

CASH FLOW USED IN FINANCING ACTIVITIES

    

Issuance (repayment) of shares:

    

- Parent company shareholders

  262  89  511 

- Treasury shares

  (1,189) (1,526) (3,830)

- Minority shareholders

  (4) 2  17 

Dividends paid:

    

- Parent company shareholders

  (4,945) (4,510) (3,999)

- Minority shareholders

  (213) (228) (326)

Net issuance (repayment) of non-current debt

  3,009  3,220  3,722 

Increase (decrease) in current borrowings

  1,437  (2,654) (6)

Increase (decrease) in current financial assets and liabilities

  850  2,265  (3,496)

Cash flow used in financing activities

  (793) (3,342) (7,407)

Net increase (decrease) in cash and cash equivalents

  6,821  4,178  (920)

Effect of exchange rates

  (488) (683) (905)

Cash and cash equivalents at the beginning of the period

  5,988  2,493  4,318 

Cash and cash equivalents at the end of the period

  12,321  5,988  2,493 

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

 

  Common shares issued  Paid in
surplus
and
retained
earnings		  Currency
translation
adjustment		  Treasury shares  Shareholders’
equity
Group share		  Minority
interests		  Total
shareholders’
equity		 
(M€) Number  Amount    Number  Amount    

As of January 1, 2006

 615,116,296  6,151  37,504  1,421  (34,249,332) (4,431) 40,645  838  41,483 

Net income 2006

 —    —    11,768  —    —    —    11,768  367  12,135 

Items recognized directly in equity (Note 17)

 —    —    (37) (2,595) —    —    (2,632) (44) (2,676)

Total excluding transactions with shareholders

 —    —    11,731  (2,595) —    —    9,136  323  9,459 

Four-for-one stock split

 1,845,348,888  —    —    —    (102,747,996) —    —    —    —   

Spin-off of Arkema

 —    —    (2,061) (209) —    16  (2,254) (8) (2,262)

Dividend

 —    —    (3,999) —    —    —    (3,999) (326) (4,325)

Issuance of common shares (Note 17)

 12,322,769  30  469  —    —    —    499  —    499 

Purchase of treasury shares

 —    —    —    —    (78,220,684) (4,095) (4,095) —    (4,095)

Sale of treasury shares

 —    —    —    —    6,997,305  232  232  —    232 

Share-based payments (Note 25)

 —    —    157  —    —    —    157  —    157 

Transactions with shareholders

 1,857,671,657  30  (5,434) (209) (173,971,375) (3,847) (9,460) (334) (9,794)

Share cancellation (Note 17)

 (47,020,000) (117) (2,341) —    47,020,000  2,458  —    —    —   

As of December 31, 2006

 2,425,767,953  6,064  41,460  (1,383) (161,200,707) (5,820) 40,321  827  41,148 

Net income 2007

 —    —    13,181  —    —    —    13,181  354  13,535 

Items recognized directly in equity (Note 17)

 —    —    117  (3,013) —    —    (2,896) (111) (3,007)

Total excluding transactions with shareholders

 —    —    13,298  (3,013) —    —    10,285  243  10,528 

Dividend

 —    —    (4,510) —    —    —    (4,510) (228) (4,738)

Issuance of common shares (Note 17)

 2,769,144  7  82  —    —    —    89  —    89 

Purchase of treasury shares

 —    —    —    —    (32,387,355) (1,787) (1,787) —    (1,787)

Sale of treasury shares

 —    —    (77) —    9,161,830  341  264  —    264 

Share-based payments (Note 25)

 —    —    196  —    —    —    196  —    196 

Transactions with shareholders

 2,769,144  7  (4,309) —    (23,225,525) (1,446) (5,748) (228) (5,976)

Share cancellation (Note 17)

 (33,005,000) (82) (1,652) —    33,005,000  1,734  —    —    —   

As of December 31, 2007

 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 

Items recognized directly in equity (Note 17)

 —    —    (258) (480) —    —    (738) (34) (772)

Total excluding transactions with shareholders

 —    —    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

 —    —    (71) —    5,939,137  221  150  —    150 

Share-based payments (Note 25)

 —    —    154  —    —    —    154  —    154 

Transactions with shareholders

 6,275,977  16  (4,616) —    (21,660,863) (1,118) (5,718) (213) (5,931)

Share cancellation (Note 17)

 (30,000,000) (75) (1,566) —    30,000,000  1,641  —    —    —   

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 
   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)Treasury shares related to the stock option purchase plans and restricted stock grants.

TOTAL

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

 

 

On February 11, 2009,9, 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, 2008,2011, which will be submitted for approval to the shareholders’ meeting to be held on May 15, 2009.11, 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, 2008.2011.

The accounting principles applied in the Consolidated Financial Statements as of December 31, 2008,2011 were the same as those that were used as of December 31, 2007,2010 except for amendments and interpretations of IFRS which were mandatory for the periods beginning after January 1, 20082011 (and not early adopted). Their adoption has no material impact on the Consolidated Financial Statements as of December 31, 2008.2011.

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.

Lastly,Furthermore, where the accounting treatment of a specific transaction is not addressed by any accounting standard or interpretation, the management applies its judgment to

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;

are neutral;

are prepared on a prudent basis; and

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) PRINCIPLES OF CONSOLIDATION

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 proportionately consolidated.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.

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.(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 has the abilityis deemed to exercise significant influence, are also accounted for by the equity method.

All significant intercompany balances, transactions and income have beenare eliminated.


B) BUSINESS COMBINATIONS

B)BUSINESS COMBINATIONS

Business combinations are accounted for using the purchaseacquisition method. This method implies the recognition of the acquired identifiable assets, assumed liabilities and contingent liabilities ofany non-controlling interests in the companies acquired by the Group at their fair value.

The difference between the acquisition cost of the shares and fair value of the acquired share of the assets, liabilities and contingent liabilities identified onacquirer shall recognize goodwill at the acquisition date, is recorded as goodwill.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.

If the cost of an acquisitionconsideration transferred is lesslower than the fair value of netacquired identifiable assets of the subsidiary acquired,and assumed liabilities, an additional analysis is performed on the identification and valuation of the identifiable elements of the assets and liabilities. Any residual negative goodwillbadwill is recorded as income.

In transactions with non-controlling interests, the difference between the price paid (received) and the book value of non-controlling interests acquired (sold) is recognized directly in equity.

The analysis of goodwillpurchase price allocation is finalized within one year from the acquisition date.

C) FOREIGN CURRENCY TRANSLATIONNon-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)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)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 expense”.the statement of income.

(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 adjustment”adjustments” (for the Group share) or under “Minority“Non-controlling interests” (for the minority share)share of non-controlling interests) as deemed appropriate.

D) SALES AND REVENUES FROM SALES

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 the amount 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, areis 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.

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 title, according to the terms of the related contracts.

Revenues from services are recognized when the services have been rendered.

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 quantitiesQuantities delivered that represent production royalties and taxes, when paid in cash, are included in oil and outsidegas 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.

E) SHARE-BASED PAYMENTS

(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.

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.

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) INCOME TAXES

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 carryforwardscarry-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).

Taxes paid on the Upstream production are included in operating expenses, including those related to historical concessions held by the Group in the Middle East producing countries.

G) EARNINGS PER SHARE

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.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.

For both of these calculations, treasury 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 these calculations.

In addition, in the case of the diluted earnings per sharethis calculation the calculationwhich 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.

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)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 a well-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 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)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 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 developmentproduction costs (cost oil) as well as the sharing of hydrocarbon rights (profit oil).

Transportation assets are depreciated using the unit-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 the unit-of-production method based on proved reserves.

(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;

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.

I) GOODWILL AND OTHER INTANGIBLE ASSETS EXCLUDING MINERAL INTERESTS

Other intangible assets include goodwill, patents, trademarks, and mineral interests.lease rights.

Intangible assets are carried at cost, after deducting any accumulated depreciation and accumulated impairment losses.

GoodwillGuidance for calculating goodwill is presented in a consolidated subsidiary is calculated asNote 1 paragraph B to the excess of the cost of shares, including transaction expenses, over the fair value of the Group’s share of the net assets at the acquisition date.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 “Impairment of long-lived assets” of this Note)to the Consolidated Financial Statements).

In equity affiliates, goodwill is included in the investment carrying amount.book value.

Other intangible assets (except goodwill) have a finite useful life and are amortized on a straight-line basis over 103 to 4020 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 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.

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

  10-50 years

K) LEASES

K)LEASES

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) IMPAIRMENT OF LONG-LIVED ASSETS

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) for testing purposes.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 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” or infor property, plant and mineral interests and to “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) FINANCIAL ASSETS AND LIABILITIES

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)Loans and receivables

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)Investments in non-consolidated companies and publicly-traded equity securitiesOther 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 prolonged decline in the fair value of the investments below their cost, anlong-lasting impairment loss, a loss is recorded in the statementStatement of income.Income. This impairment is reversed in the statement of income only when the securities are sold.

 

(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 as heldto be used for trading.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 (other than euro)

When an external long-term financing is set up, specifically to finance subsidiaries, in a currency other than the euro, which is mainly the case for subsidiaries whose functional currency is the dollar, and when this financing involves currency and interest rate derivatives, these instruments qualify as fair value hedges 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 financial debts and loans to subsidiaries.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 ofon non-current financial debt” or in the liabilities under “Non-current financial debt” fordebt “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.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”.

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, natural gas, power and power purchasing/sellingcoal purchase/sales contracts related towithin 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. According to the industry practice, these instruments are considered as held for 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)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 iscan be applied as described in the previous paragraph.

 

(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:

•

Financial debts, swaps

The market value of swaps and of bonds that are hedged by those swaps havehas been determined on an individual basis by discounting future cash flows with the zero coupon interest rate curves existing at year-end;year-end.

Financial instruments related to commodity contracts:

•

Financial instruments related to commodity contracts

The valuation methodology is to mark to market all open positions for both physical and derivatives risks.paper transactions. The valuations are determined on a daily basis using observable market data based on organized markets 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 based on calculated data,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:

•

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

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.

N) INVENTORIES

•

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 :

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.

Fair value hierarchy is disclosed in Notes 29 and 30 to the Consolidated Financial Statements.

N)INVENTORIES

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-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 carrying amountcost 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) PROVISIONS AND OTHER NON-CURRENT LIABILITIES

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) ASSET RETIREMENT OBLIGATIONS

Q)ASSET RETIREMENT OBLIGATIONS

Asset retirement obligations, which result from a legal or constructive obligation, are recognized based on a reasonable estimate of their fair value 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.

ChangesAn entity is required to measure changes in the liability for an asset retirement obligation due to the passage of time (accretion) are measured 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) EMPLOYEE BENEFITS

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.

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 are expensed as incurred.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) CONSOLIDATED STATEMENT OF CASH FLOW

S)CONSOLIDATED STATEMENT OF CASH FLOWS

The Consolidated Statement of Cash flowsFlows prepared in foreign currencies arehas 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 FlowFlows under “Effect of exchange rates”. Therefore, the Consolidated Statement of Cash FlowFlows 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 Flow.Flows.

Non-current financial debt

Changes in non-current financial debt have beenare presented as athe net variation to reflect significant changes mainly related to revolving credit agreements.

T) CARBON DIOXIDE EMISSION RIGHTS

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 granted freeare booked at acquisition cost,

Sales or annual restorations of chargeemission 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 accounted for at zero carrying amount;restored.

liabilities resulting from potential differences between available quotas and quotasIf 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 liabilities and measureda liability at fair market value;value.

spot market transactions are recognized in income at cost; and

forwardForward transactions are recognized at their fair market value on the face ofin the balance sheet. Changes in the fair value of such forward transactions are recognized in the statement of income.

U) NON-CURRENT ASSETS HELD FOR SALE AND DISCONTINUED OPERATIONS

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) ALTERNATIVE IFRS METHODS

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;

borrowing costs incurred during the construction and acquisition period of property, plant and equipment and intangible assets are capitalized, as provided for under IAS 23 “Borrowing Costs”;

actuarial gains and losses on pension and other post-employment benefit obligations are recognized according to the corridor method (see Note 1 paragraph R of this Note)to the Consolidated Financial Statements); and

jointly-controlled entities are consolidated usingunder the proportionateequity method, as provided for in the alternative method of IAS 31 “Interests in joint ventures”.

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, 2008, were2011, are as follows:

Revised IAS 1 “Presentation of financial statements”

In September 2007,November 2009, the IASB issued a revised version of IAS 1 “Presentationstandard IFRS 9 “Financial Instruments” that introduces new requirements for the classification and measurement of financial statements”. The revised standard deals with the presentationassets, and included in October 2010 requirements regarding classification and measurement of financial statementsliabilities. This standard shall be completed with texts on impairment and introduces the presentation of a comprehensive income statement. It is effective for annual periods beginning onhedge accounting. Under standard IFRS 9, financial assets and liabilities are generally measured either at fair value through profit or after January 1, 2009.loss or at amortised cost if certain conditions are met. The application of revised IAS 1standard should not have any material impact for the Group given the disclosures already presented in the Consolidated Financial Statements for the year ended December 31, 2008.

Revised IAS 23 “Borrowing costs”

In March 2007, the IASB issued a revised version of IAS 23 “Borrowing costs”. Under the revised standard, an entity shall capitalize borrowing costs that are directly attributable to the acquisition or production of a qualifying asset. The revised standard is effective for annual periods beginning on or after January 1, 2009. The application of revised IAS 23 should not have any material impact on the Group’s balance sheet, income statement and shareholders’ equity, given that the Group has already applied this method (see paragraph V of this Note).

Revised IFRS 3 “Business Combinations” and revised IAS 27 “Consolidated and Separate Financial Statements”

In January 2008, the IASB issued revised versions of IFRS 3 “Business Combinations” and IAS 27 “Consolidated and Separate Financial Statements”. These revised standards introduce new provisions regarding the accounting for business combinations. They are effective as of the first annual period starting after July 1, 2009 (i.e. as of January 1, 2010 for the Group). Their application is prospective.

IFRS 8 “Operating segments”

In November 2006, the IASB issued IFRS 8 “Operating segments”. The new standard replaces IAS 14 “Segment reporting”. It requires entities to adopt an approach based on internal information used by the management

of the entity to determine reportable segments, whereas IAS 14 is based on segment risks and profitability. Entities shall apply IFRS 8 to annual periods beginning on or after January 1, 2009. The application of IFRS 8 should not have any material impact on the presentation of information by business segment in the Consolidated Financial Statements of the Group.

IFRIC 16 “Hedges of a Net Investment in a Foreign Operation”

In July 2008, the IFRIC issued interpretation IFRIC 16 “Hedges of a Net Investment in a Foreign Operation”. The interpretation provides guidance on accounting for the hedge of a net investment in a foreign operation as defined by IAS 39. The interpretation is effectivebe applicable for annual periods starting on or after October 1, 2008 (i.e.starting January 1, 2009 for the Group).2015. The application of IFRIC 16the standard as published in 2010 should not have any material effect on the Group’s consolidated balance sheet, statement of income and shareholders’shareholder’s equity.

IFRIC 17 “DistributionsIn May 2011, the IASB issued a package of Non-cash Assetsstandards 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 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 June 2011, the IASB issued revised standard IAS 19 “Employee benefits”, which leads in particular to Owners”

In November 2008, the IFRIC issued interpretation IFRIC 17 “Distributions of Non-cash Assets to Owners”. The interpretation addresses the accounting of non-cash assets distributed among two entities which are not jointly-controlled. It provides that the dividend payable should be measured at the fair valuefull recognition of the net assetsposition in respect of employee benefits obligations (liabilities net of assets) in the balance sheet, to be distributed and that any difference with the carrying amountelimination of the netcorridor approach currently used by the Group and to the obligation to evaluate the expected return on plan assets distributed should be recognised in profit or loss. The interpretationon a normative basis (via the discount rate used to value the debt). This standard is effectiveapplicable for annual periods startingbeginning on or after January 1, 2013. The impact of the application of this standard is currently assessed by the Group.

In addition, the IASB published in May 2011 standard IFRS 13 “Fair value measurement”, applicable for annual periods beginning 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, 2009 (i.e. starting January 1, 2010 for the Group).

2012. The application of IFRIC 17these standards should not have any material effect on the Group’s consolidated balance sheet, statement of income and shareholders’shareholder’s equity.


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

Adjustmentitems:

The detail of these adjustment items is presented in Note 4 to the Consolidated Financial Statements.

Adjustment items include :

 

(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)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 ensurefacilitate the comparability of the segments’ performance with those of the Group’s competitors, mainly North-American.its competitors.

In the replacement cost method, which approximates the LIFO (Last-In, First-Out) method, the variation of inventory values in the statement of income is, depending on the nature of the inventory, determined byusing 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-Out) and the replacement cost.

 

(iii)Equity shareEffect of amortization of intangible assets related to the Sanofi-Aventis mergerchanges 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.

 

Main(iv)indicators:Until June 30, 2010, TOTAL’s equity share of adjustment items reconciling “Business net income” to Net income attributable to equity holders of Sanofi (see Note 3, paragraph on the sales of Sanofi shares and loss of significant influence over Sanofi)

Main indicators

 

(i)Operating income (measure used to evaluate operating performance)

RevenuesRevenue 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 adjustmentadjustments and gains or losses on the disposal of assets.

 

(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 adjustment,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, only, after applicable income taxes (net cost of net debtdebt) and minority interests).non-controlling interests.

 

(iii)Adjusted income

Operating income, net operating income, or net income excluding the effect of adjustment items described above.

 

(iv)Fully-diluted adjusted earnings per share

Adjusted net income divided by the fully-diluted weighted-average number of common shares.

(v)Capital employed

Non-current assets and working capital, at replacement cost, net of deferred income taxes and non-current liabilities.

 

(v)(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.

 

(vi)(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.

(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) CHANGES IN THE GROUP STRUCTURE, MAIN ACQUISITIONS AND DIVESTMENTSCHANGES IN THE GROUP STRUCTURE, MAIN ACQUISITIONS AND DIVESTMENTS

During 2011, 2010 and 2009, main changes in the Group structure and main acquisitions and divestments were as follows:

20082011

 

PursuantUpstream

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 tender offer describedvalue of mineral interests that have been recognized as intangible assets in the prospectus on May 13, 2008consolidated balance sheet for€227 million.

In March 2011, Total E&P Canada Ltd., a TOTAL subsidiary, and renewed bySuncor Energy Inc. (Suncor) have finalized a strategic oil sands alliance encompassing the notices on June 19, July 4Suncor-operated Fort Hills mining project, the TOTAL-operated Joslyn mining project and July 16, 2008, the Suncor-operated Voyageur upgrader project. All three assets are located in the Athabasca region of the province of Alberta, in Canada.

TOTAL acquired 100%19.2% of Synenco Energy Inc’s Class A ordinary shares. Synenco’s main asset is a 60%Suncor’s interest in the Northern LightsFort 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.

Provisional allocation of the acquisition price and the amount of non-controlling interests at the acquisition date are as follows:

(M$)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 sold to IPIC all of its equity interest in CEPSA and received, as of July 29, 2011, an amount of€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.


TheTotal E&P Canada completed on September 30, 2010 the acquisition cost, net 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 (161 Mby TOTAL (€)232 million), the cost of the acquisition for all sharesTOTAL amounted to 352 M€.862 million. This cost essentially representsamount mainly represented the value of the company’s mineral interests that have been recognized as “Intangible assets, net” on the face of the Consolidated Balance Sheet for 221 M€.

Synenco Energy Inc. is fully consolidated in TOTAL’s Consolidated Financial Statements. Its contribution to the consolidated net income for fiscal year 2008 is not material.

In August, TOTAL acquired the Dutch company Goal Petroleum B.V. The acquisition cost amounted to 349 M€. This cost essentially represents 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 M€.

Goal Petroleum B.V. is fully consolidated in TOTAL’s Consolidated Financial Statements. Its contribution to the consolidated net incomebalance sheet for fiscal year 2008 is not material.€646 million and the value of tangible assets that have been recognized in the consolidated balance sheet for€217 million.

 

PursuantTOTAL completed in September 2010 an agreement for the sale to BP and Hess of its interests in the agreementsValhall (15.72%) and Hod (25%) fields, in the Norwegian North Sea, for an amount of€800 million.

TOTAL signed between the partners in November, the Group’sSeptember 2010 an agreement with Santos and Petronas to acquire a 20% interest in the Kashagan field decreased from 18.52%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%).

The acquisition cost amounted to 16.81% (see Note 32€566 million and it mainly represented the value of mineral interests that have been recognized as intangible assets in 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.

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 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

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.

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.

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 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 non-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 non-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%.

As from July 1, 2010, given its reduced representation on the Board of Directors and the decrease in the percentage of voting rights, TOTAL ceased to have a significant influence over Sanofi-Aventis and no longer consolidated this investment under the equity method. The investment in Sanofi 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 included a€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

in the sections “Provisions and other non-current liabilities” and “Other creditors and accrued liabilities” for€818 million and€744 million respectively.

Corporate

 

During 2008,2009, TOTAL progressively sold 1.68%3.99% of Sanofi-Aventis’ share capital, thus reducing its interest to 11.38%7.39%. Sanofi-Aventis is accounted for by the equity method in TOTAL’s Consolidated Financial Statements.Statements for the year ended December 31, 2009.

2007

The changes in TOTAL’s activities in Venezuela and their consequences in the Consolidated Financial Statements are presented in Note 32 “Other risks and contingent liabilities”.

In December 2007, TOTAL completed the sale of its 70% interest in the Milford Haven Refinery in Wales (UK) to its partner Murco Petroleum Company. This operation will allow TOTAL to concentrate its UK refining operations at the wholly-owned Lindsey Oil Refinery.

During the fourth quarter 2007, TOTAL progressively sold 0.4% of Sanofi-Aventis’ share capital, thus reducing its interest to 13.06%. Sanofi-Aventis is accounted for by the equity method in TOTAL’s Consolidated Financial Statements.

2006

After approval on October 13, 2006 by the European Commission, Banco Santander Central Hispano (Santander) sold 4.35% of CEPSA’s share

capital to TOTAL at a price of€4.54 per share, for a total transaction amount of approximately 53 M€. The transaction follows the agreement signed on August 2, 2006 by TOTAL and Santander to implement the provisions of the partial award rendered on March 24, 2006 by the Netherlands Arbitration Institute, which adjudicated the dispute concerning CEPSA.

As a result, TOTAL now holds 48.83% of CEPSA.

In 2004, TOTAL announced a reorganization of its Chemicals segment to regroup its chlorochemicals, intermediates and performance polymers in a new entity that was named Arkema on October 1, 2004.

The shareholders’ meeting on May 12, 2006 approved a resolution related to the spin-off of Arkema and the distribution of Arkema shares to TOTAL shareholders. Pursuant to this approval, Arkema shares were publicly listed on May 18, 2006 on the Eurolist by Euronext market in Paris. For all periods presented, the contribution of Arkema entities to the consolidated net income is presented on the line “Net income from discontinued operations” on the face of the statement of income. Detailed information on the impact of this transaction is presented in Note 34 to the Consolidated Financial Statements.

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: Upstream, Downstream and Chemicals.

 

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 as well as healthcare activity (Sanofi-Aventis)(including the investment in 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.

A) INFORMATION BY BUSINESS SEGMENTThis plan changed the organization through the creation of:

 

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 from continuing operations

      10,590 

Net income from discontinued operations

                —   

Net income

                10,590 

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 ;

 

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 interests

 (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 from continuing operations

      (3,330)

Net income from discontinued operations

               —   

Net income

               (3,330)

a Supply & Marketing segment that is dedicated to the global supply and marketing of petroleum products.

A)INFORMATION BY BUSINESS SEGMENT

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)adjustmentsAdjustments include special items, inventory valuation effect and, equity shareas from January 1st, 2011, the effect of amortization of intangible assets related to the Sanofi-Aventis merger.changes in fair value.

(b)   Of which inventory valuation effect

On operating income

—  (2,776)(727)—  

On net operating income

—  (1,971)(504)—  

(c)   Of which equity share of amortization of intangible assets related to the Sanofi-Aventis merger.

—  —  —  (393)

For the year ended December 31, 2008

(adjusted)

(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) (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 from continuing operations

                13,920 

Adjusted net income from discontinued operations

                —   

Adjusted net income

                13,920 

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)

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
(of continuing operations)

 36% 20% 9%      26%

For the year ended December 31, 2007
(M€)		 Upstream  Downstream  Chemicals  Corporate  Intercompany         Total 

Non-Group sales

 19,706  119,212  19,805  29  —    158,752 

Intersegment sales

 21,173  5,125  1,190  181  (27,669) —   

Excise taxes

 —    (21,928) —    —    —    (21,928)

Revenues from sales

 40,879  102,409  20,995  210  (27,669) 136,824 

Operating expenses

 (17,697) (96,367) (19,076) (627) 27,669  (106,098)

Depreciation, depletion and amortization of tangible assets and mineral interests

 (3,679) (1,218) (495) (33) —    (5,425)

Operating income

 19,503  4,824  1,424  (450) —    25,301 

Equity in income (loss) of affiliates and other items

 1,330  284  (11) 745  —    2,348 

Tax on net operating income

 (11,996) (1,482) (426) 128  —    (13,776)

Net operating income

 8,837  3,626  987  423  —    13,873 

Net cost of net debt

      (338)

Minority interests

                (354)

Net income from continuing operations

      13,181 

Net income from discontinued operations

                —   

Net income

                13,181 

For the year ended December 31, 2007
(M€) (adjustments)(a)		 Upstream  Downstream  Chemicals  Corporate  Intercompany        Total 

Non-Group sales

      

Intersegment sales

      

Excise taxes

                 

Revenues from sales

                 

Operating expenses

 (11) 1,580  273  —     1,842 

Depreciation, depletion and amortization of tangible assets and mineral interests

 —    (43) (4) —      (47)

Operating income(b)

 (11) 1,537  269  —      1,795 

Equity in income (loss) of affiliates and other items(c)

 (4) 24  (54) (225)  (259)

Tax on net operating income

 3  (470) (75) (2)   (544)

Net operating income(b)

 (12) 1,091  140  (227)   992 

Net cost of net debt

      —   

Minority interests

               (14)

Net income from continuing operations

      978 

Net income from discontinued operations

               —   

Net income

               978 

(a)adjustments include special items, inventory valuation effect and equity share of amortization of intangible assets related to the Sanofi-Aventis merger.

(b)   Of which inventory valuation effect

on operating income

�� —  1,529301—  

on net operating income

—  1,098201—  

(c)   Of which equity share of amortization of intangible
assets related to the Sanofi-Aventis merger.

—  —  —  (318)

For the year ended December 31, 2007
(adjusted)(M€)		 Upstream  Downstream  Chemicals  Corporate  Intercompany         Total 

Non-Group sales

 19,706  119,212  19,805  29  —    158,752 

Intersegment sales

 21,173  5,125  1,190  181  (27,669) —   

Excise taxes

 —    (21,928) —    —    —    (21,928)

Revenues from sales

 40,879  102,409  20,995  210  (27,669) 136,824 

Operating expenses

 (17,686) (97,947) (19,349) (627) 27,669  (107,940)

Depreciation, depletion and amortization of tangible assets and mineral interests

 (3,679) (1,175) (491) (33) —    (5,378)

Adjusted operating income

 19,514  3,287  1,155  (450) —    23,506 

Equity in income (loss) of affiliates and other items

 1,334  260  43  970  —    2,607 

Tax on net operating income

 (11,999) (1,012) (351) 130  —    (13,232)

Adjusted net operating income

 8,849  2,535  847  650  —    12,881 

Net cost of net debt

      (338)

Minority interests

                (340)

Adjusted net income from continuing operations

      12,203 

Adjusted net income from discontinued operations

                —   

Adjusted net income

                12,203 

For the year ended December 31, 2007
(M€)		 Upstream  Downstream  Chemicals  Corporate  Intercompany         Total 

Capital expenditures

 8,882  1,875  911  54    11,722 

Divestments at selling price

 751  394  83  328    1,556 

Cash flow from operating activities

 12,692  4,148  1,096  (250)    17,686 

Balance sheet as of December 31,
2007

                  

Property, plant and equipment, intangible assets, net

 32,535  8,308  5,061  213    46,117 

Investments in equity affiliates

 3,021  2,105  728  6,851    12,705 

Loans to equity affiliates and other non-current assets

 3,748  1,183  456  634    6,021 

Working capital

 (94) 6,811  2,774  506    9,997 

Provisions and other non-current liabilities

 (12,147) (2,018) (1,697) (1,441)    (17,303)

Capital Employed (balance sheet)

 27,063  16,389  7,322  6,763    57,537 

Less inventory valuation effect

 —    (4,198) (424) 1,112     (3,510)

Capital Employed (Business segment information)

 27,063  12,191  6,898  7,875     54,027 

ROACE as a percentage (of continuing operations)

 34%  21%  12%        24% 

For the year ended December 31, 2006
(M€)		  Upstream  Downstream  Chemicals  Corporate  Intercompany  Total 

Non-Group sales

  20,782  113,887  19,113  20  —    153,802 

Intersegment sales

  20,603  4,927  1,169  177  (26,876) —   

Excise taxes

  —    (21,113) —    —    —    (21,113)

Revenues from sales

  41,385  97,701  20,282  197  (26,876) 132,689 

Operating expenses

  (17,759) (93,209) (18,706) (706) 26,876  (103,504)

Depreciation, depletion and amortization of tangible assets and mineral interests

  (3,319) (1,120) (580) (36) —    (5,055)

Operating income

  20,307  3,372  996  (545) —    24,130 

Equity in income (loss) of affiliates and other items

  1,211  384  (298) 797  —    2,094 

Tax on net operating income

  (12,764) (1,125) (191) 206  —    (13,874)

Net operating income

  8,754  2,631  507  458  —    12,350 

Net cost of net debt

       (210)

Minority interests

                 (367)

Net income from continuing operations

       11,773 

Net income from discontinued operations

                 (5)

Net income

 

 11,768 

For the year ended December 31, 2006
(adjustments)(a)

(M€)

  Upstream  Downstream  Chemicals  Corporate  Intercompany  Total 
        
        

Non-Group sales

        

Intersegment sales

        

Excise taxes

                   

Revenues from sales

                   

Operating expenses

  —    (272) (158) (27)   (457)

Depreciation, depletion and amortization of tangible assets and mineral interests

  —    —    (61) —       (61)

Operating income(b)

  —    (272) (219) (27)    (518)

Equity in income (loss) of affiliates and other items(c)

  195  178  (327) (295)   (249)

Tax on net operating income

  (150) (59) 169  (5)    (45)

Net operating income(b)

  45  (153) (377) (327)    (812)

Net cost of net debt

  —   

Minority interests

  14 

Net income from continuing operations

  (798)

Net income from discontinued operations

  (19)

Net income

  (817)

(a)adjustments include special items, inventory valuation effect and equity share of amortization of intangible assets related to the Sanofi-Aventis merger.

(b)    Of which inventory valuation effect

  Upstream   Downstream  ChemicalsCorporate    

On           on operating income

  —  (272)—  (42)1,224  (9) —      

On           on net operating income

  —  (327)—  (28)859  10—

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.

(b)    Of which inventory valuation effect

UpstreamDownstreamChemicalsCorporate

       on operating income

—863130—

       on net operating income

—640113—     

(c)    Of which equity share of amortization of intangible assetsadjustments related to the Sanofi-Aventis merger.Sanofi

  —  —    —    —(31181)   

For the year ended December 31, 2006
(adjusted)

(M€)

  Upstream Downstream Chemicals Corporate Intercompany Total 
For the year ended December 31, 2010
(adjusted) (M€)(a)		  Upstream Downstream Chemicals Corporate Intercompany Total 

Non-Group sales

  20,782  113,887  19,113  20  —    153,802    18,527    123,245    17,490    7    —    159,269  

Intersegment sales

  20,603  4,927  1,169  177  (26,876) —      22,540    4,693    981    186    (28,400)   —  

Excise taxes

  —    (21,113) —    —    —    (21,113)   —    (18,793)   —    —    —    (18,793) 

Revenues from sales

  41,385  97,701  20,282  197  (26,876) 132,689    41,067    109,145    18,471    193    (28,400)   140,476  

Operating expenses

  (17,759) (92,937) (18,548) (679) 26,876  (103,047)   (18,271)   (106,583)   (17,066)   (665)   28,400    (114,185) 

Depreciation, depletion and amortization of tangible assets and mineral interests

  (3,319) (1,120) (519) (36) —    (4,994)   (5,143)   (1,311)   (512)   (39)   —    (7,005) 

Adjusted operating income

  20,307  3,644  1,215  (518) —    24,648    17,653    1,251    893    (511)   —    19,286  

Equity in income (loss) of affiliates and other items

  1,016  206  29  1,092  —    2,343    1,350    267    231    368    —    2,216  

Tax on net operating income

  (12,614) (1,066) (360) 211  —    (13,829)   (10,406)   (350)   (267)   269    —    (10,754) 

Adjusted net operating income

  8,709  2,784  884  785  —    13,162    8,597    1,168    857    126    —    10,748  

Net cost of net debt

       (210)        (226) 

Minority interests

       (381)

Adjusted net income from continuing operations

   12,571 

Adjusted net income from discontinued operations

       14 

Non-controlling interests

    (234) 

Adjusted net income

   12,585     10,288  

Adjusted fully-diluted earnings per share (€)

Adjusted fully-diluted earnings per share (€)

  

  4.58  

 

For the year ended December 31, 2006
(M€)		  Upstream  Downstream  Chemicals  Corporate  Intercompany          Total 

Capital expenditures

  9,001  1,775  995  81    11,852 

Divestments at selling price

  1,458  428  128  264    2,278 

Cash flow from operating activities

  11,524  3,626  972  (61)    16,061 

Balance sheet as of December 31,
2006

                   

Property, plant and equipment, intangible assets, net

  31,875  8,211  4,983  212    45,281 

Investments in equity affiliates

  2,153  1,922  713  7,010    11,798 

Loans to equity affiliates and other non-current assets

  2,744  1,065  477  585    4,871 

Working capital

  199  6,067  2,609  (78)   8,797 

Provisions and other non-current liabilities

  (11,427) (2,093) (1,807) (1,052)    (16,379)

Capital Employed (balance sheet)

  25,544  15,172  6,975  6,677    54,368 

Less inventory valuation effect

  —    (2,789) (231) 738     (2,282)

Capital Employed (Business segment information)

  25,544  12,383  6,744  7,415     52,086 

ROACE as a percentage (of continuing operations)

  35%  23%  13%        26% 

B) RECONCILIATION BETWEEN BUSINESS SEGMENT INFORMATION AND THE CONSOLIDATED STATEMENT OF INCOME

The table below reconciles the information presented above with the Consolidated Statement of Income:

(a)Except for earnings per share

 

For the year ended December 31, 2008
(M€)		  Adjusted  Adjustments(a)  Consolidated
statement of
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)

Net income from continuing operations (Group without Arkema)

  14,306  (3,353) 10,953 

Net income from discontinued operations (Arkema)

  —    —    —   

Consolidated net income

  14,306  (3,353) 10,953 

Group share

  13,920  (3,330) 10,590 

Minority interests

  386  (23) 363 
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  

 

(a)Adjustments include special items, inventory valuation effect and equity share of amortization of intangible assetsadjustments related to Sanofi.

(b)    Of which inventory valuation effect

UpstreamDownstreamChemicalsCorporate

       on operating income

—1,816389—

       on net operating income

—1,285254—

(c)    Of which equity share of adjustments related to Sanofi

———(300) 

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  

(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

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.

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%  

(a)Adjusted shareholders’ equity as of December 31, 2008 amounted to€47,410 million.

C)RECONCILIATION OF THE INFORMATION BY BUSINESS SEGMENT WITH CONSOLIDATED FINANCIAL STATEMENTS

The table below presents the impact of adjustment items on the Consolidated Statement of Income:

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 Sanofi-Aventis merger.effect of changes in fair value.

For the year ended December 31, 2007

(M€)

  Adjusted Adjustments(a) Consolidated
statement of
income		 
For the year ended December 31, 2010 (M€)  Adjusted Adjustments(a) Consolidated
statement of
income		 

Sales

  158,752  —    158,752    159,269    —    159,269  

Excise taxes

  (21,928) —    (21,928)   (18,793)   —    (18,793) 

Revenues from sales

  136,824  —    136,824    140,476    —    140,476  

Purchases, net of inventory variation

  (89,688) 1,881  (87,807)   (94,286)   1,115    (93,171) 

Other operating expenses

  (17,375) (39) (17,414)   (19,035)   (100)   (19,135) 

Exploration costs

  (877) —    (877)   (864)   —    (864) 

Depreciation, depletion and amortization of tangible assets and mineral interests

  (5,378) (47) (5,425)   (7,005)   (1,416)   (8,421) 

Other income

  384  290  674    524    872    1,396  

Other expense

  (225) (245) (470)   (346)   (554)   (900) 

Financial interest on debt

  (1,783) —    (1,783)   (465)   —    (465) 

Financial income from marketable securities & cash equivalents

  1,244  —    1,244    131    —    131  

Cost of net debt

  (539) —    (539)   (334)   —    (334) 

Other financial income

  643  —    643    442    —    442  

Other financial expense

  (274) —    (274)   (407)   —    (407) 

Equity in income (loss) of affiliates

  2,079  (304) 1,775    2,003    (50)   1,953  

Income taxes

  (13,031) (544) (13,575)   (10,646)   418    (10,228) 

Net income from continuing operations (Group without Arkema)

  12,543  992  13,535 

Net income from discontinued operations (Arkema)

  —    —    —   

Consolidated net income

  12,543  992  13,535    10,522    285    10,807  

Group share

  12,203  978  13,181    10,288    283    10,571  

Minority interests

  340  14  354 

Non-controlling interests

   234    2    236  

(a)Adjustments include special items, inventory valuation effect and, until June 30, 2010, equity share of adjustments related to Sanofi.

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  

 

(a)Adjustments include special items, inventory valuation effect and equity share of amortization of intangible assetsadjustments related to the Sanofi-Aventis merger.Sanofi.

 

For the year ended December 31, 2006

(M€)

  Adjusted  Adjustments(a)  Consolidated
statement of
income		 

Sales

  153,802  —��   153,802 

Excise taxes

  (21,113) —    (21,113)

Revenues from sales

  132,689  —    132,689 

Purchases, net of inventory variation

  (83,020) (314) (83,334)

Other operating expenses

  (19,393) (143) (19,536)

Exploration costs

  (634) —    (634)

Depreciation, depletion and amortization of tangible assets and mineral interests

  (4,994) (61) (5,055)

Other income

  423  366  789 

Other expense

  (330) (373) (703)

Financial interest on debt

  (1,731) —    (1,731)

Financial income from marketable securities & cash equivalents

  1,367  —    1,367 

Cost of net debt

  (364) —    (364)

Other financial income

  592  —    592 

Other financial expense

  (277) —    (277)

Equity in income (loss) of affiliates

  1,935  (242) 1,693 

Income taxes

  (13,675) (45) (13,720)

Net income from continuing operations (Group without Arkema)

  12,952  (812) 12,140 

Net income from discontinued operations (Arkema)

  14  (19) (5)

Consolidated net income

  12,966  (831) 12,135 

Group share

  12,585  (817) 11,768 

Minority interests

  381  (14) 367 

(a)D)Adjustments include special items, inventory valuation effect and equity share of amortization of intangible assets related to the Sanofi-Aventis merger.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

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  

 

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

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) 

 

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 special items recorded by Sanofi-Aventis

  —    —    —    —    —   

TOTAL’s equity share of adjustments related to the Sanofi-Aventis merger

  —    —    —    (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)

Adjustments to operating income
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  

For the year ended December 31, 2007(M€)  Upstream  Downstream  Chemicals  Corporate  Total 

Inventory valuation effect

  —    1,529  301  —    1,830 

Restructuring charges

  —    —    —    —    —   

Asset impairment charges

  —    (43) (4) —    (47)

Other items

  (11) 51  (28) —    12 

Total

  (11) 1,537  269  —    1,795 

Adjustments to net income

For the year ended December 31, 2007(M€)  Upstream  Downstream  Chemicals  Corporate  Total 

Inventory valuation effect

  —    1,084  201  —    1,285 

TOTAL’s equity share of special items recorded by Sanofi-Aventis

  —    —    —    75  75 

TOTAL’s equity share of adjustments related to the Sanofi-Aventis merger

  —    —    —    (318) (318)

Restructuring charges

  —    (20) (15) —    (35)

Asset impairment charges

  (93) (61) (8) —    (162)

Gains (losses) on disposals of assets

  89  101  —    116  306 

Other items

  (8) (27) (38) (100) (173)

Total

  (12) 1,077  140  (227) 978 

Adjustments to operating income

For the year ended December 31, 2006

(M€)

  Upstream  Downstream  Chemicals  Corporate  Total 

Inventory valuation effect

  —    (272) (42) —    (314)

Restructuring charges

  —    —    (25) —    (25)

Asset impairment charges

  —    —    (61) —    (61)

Other items

  —    —    (91) (27) (118)

Total

  —    (272) (219) (27) (518)

Adjustments to net income

For the year ended December 31, 2006

(M€)

  Upstream Downstream Chemicals Corporate Total 

Adjustments to operating income

For the year ended December 31, 2009 (M€)

  Upstream Downstream Chemicals Corporate Total 

Inventory valuation effect

  —    (330) (28) —    (358)   —    1,816    389    —    2,205  

TOTAL’s equity share of special items recorded by Sanofi-Aventis

  —    —    —    (81) (81)

TOTAL’s equity share of adjustments related to the Sanofi-Aventis merger

  —    —    —    (309) (309)

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

  —    —    (154) —    (154)   —    (27)   (102)   —    (129) 

Asset impairment charges

  —    —    (40) —    (40)   (52)   (253)   (28)   —    (333) 

Gains (losses) on disposals of assets

  130  174  —    —    304    —    —    —    179    179  

Other items

  (71) —    (172) 64  (179)   (112)   (182)   7    —    (287) 

Total

  59  (156) (394) (326) (817)   (164)   817    131    (121)   663  

 

D) ADDITIONAL INFORMATION ON IMPAIRMENTS

E)ADDITIONAL INFORMATION ON IMPAIRMENTS

In the Upstream, Downstream and Chemicals segments, impairments of assets have been recognized for the year ended December 31, 2008,2011, with an impact of 216 M€781 million in operating income and 244 M€1,014 million in net income, Group share. These impairments werehave been disclosed as adjustments to operating income for 177 M€and adjustments to net income, for 205 M€.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 CGUs ofprinciples applied are the Upstream segment affected by these impairments are oil fields and associates accounted for by the equity method. The impairments recorded during 2008 are mainly due to the deterioration in the operating conditions of the specific assets. Economic assumptions, notably on hydrocarbon prices, made by management have not triggered the recognition of impairments and would not have even if hydrocarbon prices had been 25% lower than assumed by management.

The CGUs of the Dowstream segment are affiliates or groups of affiliates organized mostly by country.

The CGUs of the Chemicals segment are worldwide business units, including activities or products with common strategic, commercial and industrial characteristics.

In addition,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“Impairment of long-lived assets"assets”; and

future cash flows includinghave 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 have beenassets. They are discounted using aan 8% after taxpost-tax discount rate. This rate, isthis rate being a weighted-average capital cost estimated from historical market data.

These assumptions have This rate has been applied consistently for the years 2006, 2007ending in 2009, 2010 and 2008.2011.

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 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, 2011, the Group has recognized impairments with an impact of€75 million in operating income and€531 million in net income, Group share. A 10% decrease in hydrocarbons prices would not lead to additional impairment losses. In 2011, impairment losses accounted for mainly include the impairment of the 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 the 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 the share 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. For the refining activities, the 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 still based in Europe with a falling demand, whereas the emerging countries (Middle East and Asia) report a strong growth in the consumption of petroleum products. In this persistent context of deteriorated margins, the refining CGUs in France and in the United Kingdom have suffered substantial operating losses despite the constant efforts to improve operations. This situation, coupled with less favorable outlooks, led the Group to recognize impairments within the CGUs Refining France and United Kingdom with an impact of€700 million in operating income and€478 million in net income, Group share. 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€443 million in net income, Group share. A variation of (1) % of the discount rate would have 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, 2007,2010, impairments of assets have been recognized in the Upstream, Downstream and Chemicals segments with an impact of 47 M€1,416 million in operating income and 162 M€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, 2006, changes in the economic environment of certain business units of the Chemicals segment had triggered the recognition of2009, impairments of assets for 61 M€ in operating income and 40M€ in net income, Group share.


For the year ended December 31, 2008, reversals of impairment losses have been recognized in the Upstream, segmentDownstream and Chemicals segments with an impact of 41 M€413 million in operating income and 29 M€382 million in net income, Group share. These impairments have been disclosed as adjustments to operating income for€391 million and adjustments to net income, Group share for€333 million.

NoFor the years ended December 31, 2011, 2010 and 2009, no reversal of impairment losses has been recognized in 2006 and 2007.recognized.


 

5)INFORMATION BY GEOGRAPHICAL AREA

 

(M€) France Rest of
Europe		 North
America		 Africa 

Asia-Pacific
and rest of

world

  Total

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

For the year ended December 31, 2007

             

Non-Group sales

 37,949 73,757 12,404 10,401 24,241  158,752

Property, plant and equipment, intangible assets, net

 6,437 14,554 4,444 11,872 8,810  46,117

Capital expenditures

 1,627 2,538 740 3,745 3,072  11,722

For the year ended December 31, 2006

             

Non-Group sales(a)

 36,890 70,992 13,031 10,086 22,803  153,802

Property, plant and equipment, intangible assets, net

 5,860 14,066 4,318 10,595 10,442  45,281

Capital expenditures

 1,919 2,355 881 3,326 3,371  11,852

(a)Non-Group sales from continuing operations.
(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€)  2008 2007 2006   2011 2010 2009 

Purchases, net of inventory variation(a)

  (111,024) (87,807) (83,334)   (113,892)(b)   (93,171)   (71,058) 

Exploration costs

  (764) (877) (634)   (1,019)   (864)   (698) 

Other operating expenses(b)(c)

  (19,101) (17,414) (19,536)   (19,843)   (19,135)   (18,591) 

of which non-current operating liabilities (allowances) reversals

  459  781  454    615    387    515  

of which current operating liabilities (allowances) reversals

  (29) (42) (111)   (150)   (101)   (43) 

Operating expenses

  (130,889) (106,098) (103,504)   (134,754)   (113,170)   (90,347) 

 

(a)Includes royaltiestaxes paid on oil and gas production in the Upstream segment, (seenamely royalties.

(b)As of December 31, 2011, the Group valued under / over lifting at market value. The impact in particular the taxes paid to Middle East oil producing countries for the Group’s concessionsoperating expenses is€577 million and€103 million in net income, Group share as detailed in Note 33 to the Consolidated Financial Statements “Other information”).of December 31, 2011.
(b)(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€)		  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

As of December 31,(M€)          2008          2007          2006 

Gains (losses ) on disposal of assets

  257  639  789 

Foreign exchange gains

  112  35  —   

Other income

  369  674  789 

Foreign exchange losses

  —    —    (30)

Amortization of other intangible assets (excluding mineral interests )

  (162) (178) (182)

Other

  (392) (292) (491)

Other expense

  (554) (470) (703)

In 2008,2011, gains and losses on disposal of assets are mainly related to salesthe sale of non-currentthe interest in CEPSA, to the sale of assets in the Upstream segment as well as disposal(especially the sale of shares of Sanofi-Aventis. The “Other” heading is mainly comprised of:

107 M€ of restructuring charges10% Group’s interest in the Upstream, DownstreamColombian pipeline OCENSA) and Chemicals segments;to the sale of photocure and

48 M€ of changes in provisions related to various antitrust investigations as coatings resins businesses. These disposals are described in Note 323 to the Consolidated Financial Statements “Other risks and contingent liabilities”.Statements.

In 2007,2010, gains and losses on disposal of assets were mainly related to sales of non-current assets in the Upstream segment (sale of the interests in the Valhall and Downstream segments,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-Aventis. The “Other” heading was mainly comprised of:

51 M€ of restructuring charges in the Downstream and Chemicals segments; and

100 M€ of changes in provisions related to various antitrust investigations as described inSanofi (see Note 323 to the Consolidated Financial Statements “Other risks and contingent liabilities”Statements).

In 2006,2009, gains and losses on disposal of assets were mainly related to salesthe disposal of financial assets. Theshares of Sanofi.

Other expense

In 2011, the heading “Other” heading wasis mainly comprised of:

100 Mof€ of changes in provisions related to the Toulouse-AZF plant explosion (civil liability);

188 M€243 million of restructuring charges in the Upstream, Downstream and Chemicals segment;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 million of restructuring charges in the Downstream and Chemicals segments.

32 M€ of changes in provisions related to various antitrust investigations as described in Note 32 to the Consolidated Financial Statements “Other risks and contingent liabilities”.


8)OTHER FINANCIAL INCOME AND EXPENSE

 

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) 

8) OTHER FINANCIAL INCOME AND EXPENSE

As of December 31, (M€)  2008  2007  2006 

Dividend income on non-consolidated companies

  238  218  237 

Capitalized financial expenses

  271  322  236 

Other

  219  103  119 

Other financial income

  728  643  592 

Accretion of asset retirement obligations

  (229) (189) (182)

Other

  (96) (85) (95)

Other financial expense

  (325) (274) (277)

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, IndustryFinance and Employment.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 agreement.

As a consequence, TOTAL S.A. is taxed in accordance with the approval forcommon tax regime as from 2011. The exit of the consolidated income tax treatment has been requested for 2008 to 2010. It is being reviewed byno significant impact, neither on the French Ministry of Budget.Group’s financial situation nor on the 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 20,661 M€27,444 million as of December 31, 2008.2011. 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 13,534 M€)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€)  2008 2007 2006   2011 2010 2009 

Current income taxes

  (14,117) (12,141) (12,997)   (12,495)   (9,934)   (7,213) 

Deferred income taxes

  (29) (1,434) (723)   (1,578)   (294)   (538) 

Total income taxes

  (14,146) (13,575) (13,720)   (14,073)   (10,228)   (7,751) 

Before netting deferred tax assets and liabilities by fiscal entity, the components of deferred tax balances as of December 31, 2008, 2007 and 2006 are as follows:

 

As of December 31,(M€)  2008 2007 2006   2011 2010 2009 

Net operating losses and tax carry forwards

  1,031  560  633    1,584    1,145    1,114  

Employee benefits

  519  760  830    621    535    517  

Other temporary non-deductible provisions

  2,075  2,341  2,157    3,521    2,757    2,184  

Gross deferred tax assets

  3,625  3,661  3,620    5,726    4,437    3,815  

Valuation allowance

  (475) (449) (572)   (667)   (576)   (484) 

Net deferred tax assets

  3,150  3,212  3,048    5,059    3,861    3,331  

Excess tax over book depreciation

  (8,836) (9,254) (8,180)   (12,831)   (10,966)   (9,791) 

Other temporary tax deductions

  (1,171) (1,209) (1,237)   (2,721)   (1,339)   (1,179) 

Gross deferred tax liability

  (10,007) (10,463) (9,417)   (15,552)   (12,305)   (10,970) 

Net deferred tax liability

  (6,857) (7,251) (6,369)   (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€)   2008 2007 2006   2011 2010 2009 

Deferred tax assets, non-current

  (Note 14) 1,010  797  806 

Deferred tax assets, current

  (Note 16) 206  112  94 

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

   (7,973) (7,933) (7,139)   (12,260)   (9,947)   (8,948) 

Deferred tax liabilities, current

   (100) (227) (130)   —    (26)   (69) 

Net amount

   (6,857) (7,251) (6,369)   (10,493)   (8,444)   (7,639) 

The net deferred tax variation in the balance sheet is analyzed as follows:

 

As of December 31,(M€)  2008 2007 2006   2011 2010 2009 

Opening balance

  (7,251) (6,369) (5,670)   (8,444)   (7,639)   (6,857) 

Deferred tax on income for continuing operations

  (29) (1,434) (723)

Deferred tax on income for discontinued operations

  —    —    (10)

Deferred tax on income

   (1,578)   (294)   (538) 

Deferred tax on shareholders’ equity(a)

  30  (6) (17)   (55)   28    (38) 

Changes in scope of consolidation(b)

  (1) 158  (311)

Changes in scope of consolidation

   (17)   (59)   (1) 

Currency translation adjustment

  394  400  362    (399)   (480)   (205) 

Closing balance

  (6,857) (7,251) (6,369)   (10,493)   (8,444)   (7,639) 

 

(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.sale as well as deferred taxes related to the cash flow hedge (see Note 17 to the Consolidated Financial Statements).

(b)

This amount includes mainly the impact of the spin-off of Arkema for 2006.

Reconciliation between provision for income taxes and pre-tax income:

 

For the year ended December 31,(M€)  2008  2007  2006(a) 

Net income

  10,953  13,535  12,140 

Provision for income taxes

  14,146  13,575  13,720 

Pre-tax income

  25,099  27,110  25,860 

French statutory tax rate

  34.43%  34.43%  34.43% 

Theoretical tax charge

  (8,642) (9,334) (8,904)

Difference between French and foreign income tax rates

  (6,326) (5,118) (5,484)

Tax effect of equity in income (loss) of affiliates

  593  611  583 

Permanent differences

  315  122  324 

Adjustments on prior years income taxes

  12  75  (87)

Adjustments on deferred tax related to changes in tax rates

  (31) (16) (88)

Changes in valuation allowance of deferred tax assets

  (63) 80  (62)

Other

  (4) 5  (2)

Net provision for income taxes

  (14,146) (13,575) (13,720)

(a)Excluding discontinued operations.

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 2008 (34.43% in 20072010 and 2006)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.activities.


Net operating losses and tax credit carryforwards

Deferred tax assets related to net operating losses and tax carryforwards were available in various tax jurisdictions, expiringexpire in the following years:

 

As of December 31,(M€)  2008  2007  2006
    Basis  Tax  Basis  Tax  Basis  Tax

2007

  —    —    —    —    234  115

2008

  —    —    290  141  210  102

2009

  233  115  222  109  157  80

2010

  167  79  129  59  299  104

2011(a)

  93  42  33  13  23  9

2012(b)

  61  19  68  22  —    —  

2013 and after

  1,765  587  —    —    —    —  

Unlimited

  560  189  641  216  638  223

Total

  2,879  1,031  1,383  560  1,561  633
    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)

Net operating losses and tax credit carryforwards in 20112014 and after for 2006.2009.

(b)

Net operating losses and tax credit carryforwards in 20122015 and after for 2007.2010.

10)INTANGIBLE ASSETS

 

As of December 31, 2008(M€)    
    Cost  Amortization
and
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

As of December 31, 2007(M€)    
  Cost  

Amortization

and

impairment

 Net
As of December 31, 2011 (M€)  Cost   Amortization and
impairment		 Net 

Goodwill

  1,684  (617) 1,067   1,903     (993)   910  

Proved and unproved mineral interests

  5,327  (2,310) 3,017   13,719     (3,181)   10,538  

Other intangible assets

  2,452  (1,886) 566   3,377     (2,412)   965  

Total intangible assets

  9,463  (4,813) 4,650  18,999   (6,586) 12,413 

 

As of December 31, 2006(M€)    
  Cost  

Amortization

and

impairment

 Net
As of December 31, 2010 (M€)  Cost   Amortization and
impairment		 Net 

Goodwill

  1,759  (635) 1,124   1,498     (596)   902  

Proved and unproved mineral interests

  5,457  (2,473) 2,984   10,099     (2,712)   7,387  

Other intangible assets

  2,377  (1,780) 597   2,803     (2,175)   628  

Total intangible assets

  9,593  (4,888) 4,705   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:

 

(M€)  Net amount as of
January 1,		  Acquisitions  Disposals  

Amortization

and

impairment

  Currency
translation
adjustment		  Other  Net amount as of
December 31,

2008

  4,650  404  (3) (259) (93) 642  5,341

2007

  4,705  472  (160) (274) (208) 115  4,650

2006

  4,384  675  (25) (282) (337) 290  4,705
(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 2008,2011, the heading “Other” mainly includes mainlyChesapeake’s Barnett shale mineral interests reclassified into the impact of “proved and unproved mineral interests” from Synenco Energy Inc.acquisitions for 221 M€(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 Goal Petroleum B.V.formerly classified in accordance with IFRS 5 “Non-current assets held for 292 Msale 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) million, including the currency translation adjustment, partially compensated by the acquisition of UTS for€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 million (see Note 3 to the Consolidated Financial Statements).

A summary of changes in the carrying amount of goodwill by business segment for the year ended December 31, 20082011 is as follows:

 

(M€)  Net goodwill as of
January 1, 2008		  Increases  Impairments Other Net goodwill as of
December 31, 2008		  Net goodwill as of
January 1, 2011		   Increases   Impairments Other Net goodwill as of
December 31, 2011		 

Upstream

  78  —    —    —    78   78     396     (383)   (2)   89  

Downstream

  132  4  —    (6) 130   82     —     (1)   (12)   69  

Chemicals

  832  24  (3) (12) 841   717     23     (4)   (9)   727  

Corporate

  25  —    —    —    25   25     —     —    —    25  

Total

  1,067  28  (3) (18) 1,074   902     419     (388)   (23)   910  

In 2011, impairments of goodwill in the Upstream segment amount to€383 million and correspond to the impairment of the whole goodwill arising from the acquisition of SunPower (see Note 4E to the Consolidated Financial Statements).

11)PROPERTY, PLANT AND EQUIPMENT

 

As of December 31, 2008(M€)    
  Cost  Depreciation
and
impairment		 Net
As of December 31, 2011 (M€)  Cost   Depreciation and
impairment		 Net 

Upstream properties

          

Proved properties

  61,727  (39,315) 22,412   84,222     (54,589)   29,633  

Unproved properties

  106  (1) 105   209     —    209  

Work in progress

  9,586  —    9,586   21,190     (15)   21,175  

Subtotal

  71,419  (39,316) 32,103   105,621     (54,604)   51,017  

Other property, plant and equipment

          

Land

  1,446  (429) 1,017   1,346     (398)   948  

Machinery, plant and equipment (including transportation equipment)

  21,734  (14,857) 6,877   25,838     (18,349)   7,489  

Buildings

  5,739  (3,441) 2,298   6,241     (4,131)   2,110  

Work in progress

  2,226  (10) 2,216   1,534     (306)   1,228  

Other

  6,258  (4,627) 1,631   6,564     (4,899)   1,665  

Subtotal

  37,403  (23,364) 14,039   41,523     (28,083)   13,440  

Total property, plant and equipment

  108,822  (62,680) 46,142   147,144     (82,687)   64,457  

 

As of December 31, 2007 (M€)    
    Cost  Depreciation
and
impairment		  Net

Upstream properties

     

Proved properties

  60,124  (38,735) 21,389

Unproved properties

  48  (1) 47

Work in progress

  7,010  —    7,010

Subtotal

  67,182  (38,736) 28,446

Other property, plant and equipment

     

Land

  1,460  (417) 1,043

Machinery, plant and equipment (including transportation equipment)

  20,575  (14,117) 6,458

Buildings

  5,505  (3,430) 2,075

Work in progress

  1,832  (4) 1,828

Other

  6,291  (4,674) 1,617

Subtotal

  35,663  (22,642) 13,021

Total property, plant and equipment

  102,845  (61,378) 41,467

As of December 31, 2006(M€)    
  Cost  Depreciation
and
impairment		 Net
As of December 31, 2010 (M€)  Cost   Depreciation and
impairment		 Net 

Upstream properties

          

Proved properties

  60,063  (39,211) 20,852   77,183     (50,582)   26,601  

Unproved properties

  20  (1) 19   347     (1)   346  

Work in progress

  7,080  (22) 7,058   14,712     (37)   14,675  

Subtotal

  67,163  (39,234) 27,929   92,242     (50,620)   41,622  

Other property, plant and equipment

          

Land

  1,550  (445) 1,105   1,304     (393)   911  

Machinery, plant and equipment (including transportation equipment)

  20,724  (14,131) 6,593   23,831     (17,010)   6,821  

Buildings

  5,392  (3,289) 2,103   6,029     (3,758)   2,271  

Work in progress

  1,228  (14) 1,214   2,350     (488)   1,862  

Other

  6,154  (4,522) 1,632   6,164     (4,687)   1,477  

Subtotal

  35,048  (22,401) 12,647   39,678     (26,336)   13,342  

Total property, plant and equipment

  102,211  (61,635) 40,576   131,920     (76,956)   54,964  

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,

2008

  41,467  11,442  (102) (5,941) (1,151) 427  46,142

2007

  40,576  10,241  (729) (5,674) (2,347) (600) 41,467

2006

  40,568  9,209  (175) (5,010) (2,373) (1,643) 40,576
(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  

In 2008,2011, the “Other” 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” included the impact of impairments of assets recognized for€1,416 million (see Note 4D to the Consolidated Financial Statements).

In 2010, the heading “Other” mainly corresponded to the change in the consolidation method of Samsung Total Petrochemicals (see Note 12 to the Consolidated Financial Statements) for€(541) million and the reclassification for€(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”, partially compensated by the acquisition of UTS for€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.

In 2007,obligations and Chesapeake’s Barnett shale tangible assets for€113 million (see Note 3 to the “Disposals” heading mainly included the impact of conversion of the Sincor project and the disposal of the Group’s interest in the Milford Haven refinery. The “Other” heading mainly included the impact of conversion of Sincor and the changes in Property, plant and equipment related to asset retirement obligations.

In 2006, the “Other” heading mainly included the impact of the spin-off of Arkema for 1,310 M€Consolidated Financial Statements).

Property, plant and equipment presented above include the following amounts for facilities and equipment under finance leases that have been capitalized:

 

As of December 31, 2008(M€)    
    Cost  Depreciation
and
impairment		  Net

Machinery, plant and equipment

  558  (316) 242

Buildings

  35  (28) 7

Other

  —    —    —  

Total

  593  (344) 249

As of December 31, 2007(M€)    
    Cost  Depreciation
and
impairment		  Net

Machinery, plant and equipment

  503  (265) 238

Buildings

  35  (29) 6

Other

  —    —    —  

Total

  538  (294) 244

As of December 31, 2006(M€)    
  Cost  Depreciation
and
impairment		 Net
As of December 31, 2011 (M€)  Cost   Depreciation and
impairment		 Net 

Machinery, plant and equipment

  518  (244) 274   414     (284)   130  

Buildings

  40  (27) 13   54     (25)   29  

Other

  —    —    —     —     —    —  

Total

  558  (271) 287   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€)  As of December 31,  2011 2010 2009 2011   2010   2009 
  2008 2007 2006 2008  2007  2006
   % owned    Equity value

Equity value (M€)

 % owned equity value 
  15.00% 15.00% 15.00% 1,135  1,062  887   15.00%   15.00%   15.00%   953     1,108     1,136  

PetroCedeño — EM(b)

  30.32% 30.32% —    760  534  —     30.32%   30.32%   30.32%   1,233     1,136     874  

CEPSA (Upstream share)(d)

  48.83% 48.83% 48.83% 403  246  253   —    48.83%   48.83%   —     340     385  

Angola LNG Ltd.(b)

  13.60% 13.60% —    326  155  —     13.60%   13.60%   13.60%   869     710     490  

Qatargas

  10.00% 10.00% 10.00% 251  172  186   10.00%   10.00%   10.00%   97     85     83  

Société du Terminal Méthanier de Fos Cavaou(a)

  30.30% 30.30% 30.30% 114  92  63   27.60%   28.03%   28.79%   119     125     124  

SCP Limited

  10.00% 10.00% 10.00% 96  91  100

Dolphin Energy Ltd (Del) Abu Dhabi

  24.50% 24.50% 24.50% 85  37  16   24.50%   24.50%   24.50%   208     172     118  

Qatar Liquefied Gas Company Limited II(a)

  8.35% 8.35% 8.35% 82  86  55

Moattama Gas Transportation Cy

  31.24% 31.24% 31.24% 65  53  61

Ocensa

  15.20% 15.20% 15.20% 60  57  64

Gasoducto Gasandes Argentina

  56.50% 56.50% 56.50% 58  74  115

GazTransport et Technigaz(b)

  30.00% 30.00% —    53  46  —  

Laffan Refinery

  10.00% 10.00% 10.00% 53  39  22

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

  —    —    —    350  277  331   —    —    —    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

     3,891  3,021  2,153      8,932     5,002     4,260  

CEPSA (Downstream share)

  48.83% 48.83% 48.83% 1,810  1,932  1,735

Saudi Aramco Total Refining & Petrochemicals(c)

  37.50% —    —    75  —    —  

Wepec

  22.41% 22.41% 22.41% —    70  62

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

   73  103  125   —    —    —    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

     1,958  2,105  1,922      699     2,782     2,110  

CEPSA (Chemicals share)

  48.83% 48.83% 48.83% 424  524  503

Qatar Petrochemical Company Ltd

  20.00% 20.00% 20.00% 192  150  147

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

   61  54  63   —    —    —    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

     677  728  713      1,118     1,349     652  

Sanofi-Aventis

  11.38% 13.06% 13.13% 6,137  6,851  7,010

Other

   —    —    —  

Sanofi(b)

   —    —    7.39%   —     —     4,235  

Total associates

      —     —     4,235  

Total jointly-controlled entities

    —     —     —  

Total Corporate

   6,137  6,851  7,010    —     —     4,235  

Total investments

   12,663  12,705  11,798      10,749     9,133     11,257  

Loans

   2,005  2,575  1,533    2,246     2,383     2,367  

Total investments and loans

   14,668  15,280  13,331    12,995     11,516     13,624  

 

(a)Investment accounted for by the equity method as from 2006.2010.
(b)

End of the accounting for by the equity method of Sanofi as of July 1st, 2010 (see Note 3 to the Consolidated Financial Statements).

(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 2007.
(c)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€)  As of December 31, For the year ended December 31,   % owned Equity in income (loss) 
  2008 2007 2006 2008 2007 2006 
   

% owned

    Equity in income (loss) 

NLNG

  15.00% 15.00% 15.00% 554  477  329    15.00%   15.00%   15.00%   374    207    227  

PetroCedeño — EM(b)

  30.32% 30.32% —    193  —    —      30.32%   30.32%   30.32%   55    195    166  

CEPSA (Upstream share)(d)

  48.83% 48.83% 48.83% 50  88  104    —    48.83%   48.83%   15    57    23  

Angola LNG Ltd.(b)

  13.60% 13.60% —    10  7  —      13.60%   13.60%   13.60%   6    8    9  

Qatargas

  10.00% 10.00% 10.00% 126  74  119    10.00%   10.00%   10.00%   196    136    114  

Société du Terminal Méthanier de Fos Cavaou(a)

  30.30% 30.30% 30.30% (5) (2) (4)   27.60%   28.03%   28.79%   13    —    —  

SCP Limited

  10.00% 10.00% 10.00% 4  1  —   

Dolphin Energy Ltd (Del) Abu Dhabi

  24.50% 24.50% 24.50% 83  5  (2)   24.50%   24.50%   24.50%   131    121    94  

Qatar Liquefied Gas Company Limited II(a)

  8.35% 8.35% 8.35% (11) (5) —   

Moattama Gas Transportation Cy

  31.24% 31.24% 31.24% 81  67  63 

Ocensa

  15.20% 15.20% 15.20% —    —    —   

Gasoducto Gasandes Argentina

  56.50% 56.50% 56.50% (10) (22) 7 

GazTransport et Technigaz(b)

  30.00% 30.00% —    51  45  —   

Laffan Refinery

  10.00% 10.00% 10.00% 2  —    —   

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

  —    —    —    50  6  30    —    —    —    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

     1,178  741  646       1,579    1,187    859  

CEPSA (Downstream share)

  48.83% 48.83% 48.83% 76  253  246 

Saudi Aramco Total Refining & Petrochemicals(c)

  37.50% —    —    —    —    —   

Wepec

  22.41% 22.41% 22.41% (110) 14  1 

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

   (13) (1) 26    —    —    —    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

     (47) 266  273       42    251    218  

CEPSA (Chemicals share)

  48.83% 48.83% 48.83% 10  24  26 

Qatar Petrochemical Company Ltd

  20.00% 20.00% 20.00% 66  55  45 

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

   (1) 1  —      —    —    —    (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

     75  80  71       304    306    79  

Sanofi-Aventis

  11.38% 13.06% 13.13% 515  688  556 

CEPSA (Corporate share)

  48.83% 48.83% 48.83% —    —    147 

Other

   —    —    —   

Sanofi(b)

   —    —    7.39%   —    209    486  

Total associates

      —    209    486  

Total jointly-controlled entities

    —    —    —  

Total Corporate

   515  688  703     —    209    486  

Total investments

   1,721  1,775  1,693     1,925    1,953    1,642  

 

(a)Investment accounted for by the equity method as from 2006.2010.
(b)

End of the accounting for by the equity method of Sanofi as of July 1st, 2010 (see Note 3 to the Consolidated Financial Statements).

(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 2007.2011.
(c)Investment accounted for by the equity method as from 2008.

The market value of the Group's share in CEPSA amounted to 8,833 M€ as of December 31, 2008 for an equity value of 2,637 M€.

The market value of the Group’s share in Sanofi-Aventis amountedNovatek amounts to 6,744 M€4,034 million as of December 31, 2008.2011 for an equity value of€3,368 million.

In Group share, the main financial items of the equity affiliates are as follows:follows:

 

As of December 31, (M€)2008

Assets

23,173

Shareholders' equity

12,663

Liabilities

10,510

For the year ended December 31,(M€)

2008

Revenues from sales

19,982

Pre-tax income

2,412

Income tax

(691)

Net income

1,721

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).

 

As of December 31,2008(M€)  Carrying
amount		  

Unrealized gain

(loss)

 Balance
Sheet value

Areva(a)

  69  59  128

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

  16  15  31   —     —    —  

Chicago Mercantile Exchange Group(b)

  1  5  6

Olympia Energy Fund(c)

  36  (5) 31

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(d)

  122  74  196

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

  75  —    75   60     —    60  

BTC Limited

  161  —    161   141     —    141  

Other equity securities

  733  —    733   758     —    758  

Total other equity securities(d)

  969  —    969

Total other equity securities(c)

   959     —    959  

Other investments

  1,091  74  1,165   4,578     12    4,590  
     
As of December 31, 2007(M€)  Carrying
amount		  

Unrealized gain

(loss)

 Balance
Sheet value

Areva(a)

  69  216  285

Arkema

  16  97  113

Nymex Holdings Inc

  1  15  16

Other publicly traded equity securities

  —    —    —  

Total publicly traded equity securities(d)

  86  328  414

BBPP

  71  —    71

BTC Limited

  161  —    161

Other equity securities

  645  —    645

Total other equity securities(d)

  877  —    877

Other investments

  963  328  1,291

As of December 31,(M€)  2006
  Carrying
amount		  Unrealized
gain (loss)		  Balance
sheet value

Areva(a)

  69  135  204

As of December 31, 2009

(M€)

  Carrying
amount		   Unrealized gain (loss) Balance sheet value 

Areva(b)

   69     58    127  

Arkema

  16  82  98   15     47    62  

Chicago Mercantile Exchange Group

   1     9    10  

Olympia Energy Fund — energy investment fund

   35     (2)   33  

Other publicly traded equity securities

  1  1  2   —     —    —  

Total publicly traded equity securities(d)

  86  218  304

Total publicly traded equity securities(c)

   120     112    232  

BBPP

  80  —    80   72     —    72  

BTC Limited

  185  —    185   144     —    144  

Other equity securities

  681  —    681   714     —    714  

Total other equity securities(d)

  946  —    946

Total other equity securities(c)

   930     —    930  

Other investments

  1,032  218  1,250   1,050     112    1,162  

 

(a)End of the accounting for by the equity method of Sanofi as of July 1st, 2010 (see Note 3 to the Consolidated Financial Statements).
(b)Unrealized gain based on the investment certificate.
(b)The Nymex Holdings Inc. securities have been exchanged 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.
(c)Securities acquiredIncluding cumulative impairments of€604 million in 2008.2011,€597 million in 2010 and€599 million in 2009.
(d)Including cumulative impairmentsEnd of 608 M€the accounting for by the equity method of Ocensa in 2008, 632 M€ in 2007 and 668 M€ in 2006.July 2011 (see Note 3 to the Consolidated Financial Statements).

These investments are classified as financial assets available for sale (see Note 1 paragraph Mii to the Consolidated Financial Statements).

14)OTHER NON-CURRENT ASSETS

 

As of December 31, 2008(M€)  Gross
value		  Valuation
allowance		 Net
value

As of December 31, 2011

(M€)

  Gross value   Valuation
allowance		 Net value 

Deferred income tax assets

  1,010  —    1,010   1,767     —    1,767  

Loans and advances(a)

  1,932  (529) 1,403   2,454     (399)   2,055  

Other

  631  —    631   1,049     —    1,049  

Total

  3,573  (529) 3,044   5,270     (399)   4,871  

 

As of December 31, 2007(M€)  Gross
value		  Valuation
allowance		 Net
value

As of December 31, 2010

(M€)

  Gross value   Valuation
allowance		 Net value 

Deferred income tax assets

  797  —    797   1,378     —    1,378  

Loans and advances(a)

  1,378  (527) 851   2,060     (464)   1,596  

Other

  507  —    507   681     —    681  

Total

  2,682  (527) 2,155   4,119     (464)   3,655  

 

As of December 31, 2006(M€)  Gross
value		  Valuation
allowance		 Net
value

As of December 31, 2009

(M€)

  Gross value   Valuation
allowance		 Net value 

Deferred income tax assets

  806  —    806   1,164     —    1,164  

Loans and advances(a)

  1,513  (488) 1,025   1,871     (587)   1,284  

Other

  257  —    257   633     —    633  

Total

  2,576  (488) 2,088   3,668     (587)   3,081  

 

(a)Excluding loans to equity affiliates.

Changes in the valuation allowance on loans and advances are detailed as follows:

 

(M€)

For the year ended

December 31,

  Valuation
allowance as of
January 1,		  Increases  Decreases  Currency
translation
adjustment and
other variations		  Valuation
allowance as of
December 31,		 

2008

  (527) (33) 52  (21) (529)

2007

  (488) (13) 6  (32) (527)

2006

  (584) (6) 23  79  (488)

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, 2008(M€)  

Gross

value

  Valuation
allowance		 

Net

value

As of December 31, 2011

(M€)

  Gross value   Valuation
allowance		 Net value 

Crude oil and natural gas

  2,772  (326) 2,446   4,735     (24)   4,711  

Refined products

  4,954  (416) 4,538   9,706     (36)   9,670  

Chemicals products

  1,419  (105) 1,314   1,489     (103)   1,386  

Other inventories

  1,591  (268) 1,323   2,761     (406)   2,355  

Total

  10,736  (1,115) 9,621   18,691     (569)   18,122  

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, 2007(M€)  

Gross

value

  Valuation
allowance		  

Net

value

Crude oil and natural gas

  4,746  —    4,746

Refined products

  6,874  (11) 6,863

Chemicals products

  1,188  (91) 1,097

Other inventories

  1,368  (223) 1,145

Total

  14,176  (325) 13,851

As of December 31, 2006(M€)  

Gross

value

  Valuation
allowance		 

Net

value

As of December 31, 2009 (M€)  Gross value   Valuation
allowance		 Net value 

Crude oil and natural gas

  4,038  (90) 3,948   4,581     —    4,581  

Refined products

  5,373  (44) 5,329   6,647     (18)   6,629  

Chemicals products

  1,544  (90) 1,454   1,234     (113)   1,121  

Other inventories

  1,231  (216) 1,015   1,822     (286)   1,536  

Total

  12,186  (440) 11,746   14,284     (417)   13,867  

Changes in the valuation allowance on inventories are as follows:

 

(M€)

For the year ended

December 31,

  Valuation allowance
as of
January 1,		  Increase
(net)		  Currency
translation
adjustment
and other
variations		  Valuation
allowance
as of
December 31,		 

2008

  (325) (740) (50) (1,115)

2007

  (440) 124  (9) (325)

2006

  (413) (118) 91  (440)

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, 2008(M€)  Gross
value		  Valuation
allowance		 Net
value
As of December 31, 2011 (M€)  Gross
value		   Valuation
allowance		 Net
value		 

Accounts receivable

  15,747  (460) 15,287   20,532     (483)   20,049  

Recoverable taxes

  2,510  —    2,510   2,398     —    2,398  

Other operating receivables

  6,227  (19) 6,208   7,750     (283)   7,467  

Deferred income tax

  206  —    206   —     —    —  

Prepaid expenses

  650  —    650   840     —    840  

Other current assets

  68  —    68   62     —    62  

Other current assets

  9,661  (19) 9,642   11,050     (283)   10,767  

 

As of December 31, 2007(M€)  Gross
value		  Valuation
allowance		 Net
value
As of December 31, 2010 (M€)  Gross
value		   Valuation
allowance		 Net
value		 

Accounts receivable

  19,611  (482) 19,129   18,635     (476)   18,159  

Recoverable taxes

  2,735  —    2,735   2,227     —    2,227  

Other operating receivables

  4,457  (27) 4,430   4,543     (136)   4,407  

Deferred income tax

  112  —    112   151     —    151  

Prepaid expenses

  687  —    687   657     —    657  

Other current assets

  42  —    42   41     —    41  

Other current assets

  8,033  (27) 8,006   7,619     (136)   7,483  

 

As of December 31, 2006(M€)  Gross
value		  Valuation
allowance		 Net
value
As of December 31, 2009 (M€)  Gross
value		   Valuation
allowance		 Net
value		 

Accounts receivable

  17,882  (489) 17,393   16,187     (468)   15,719  

Recoverable taxes

  2,098  —    2,098   2,156     —    2,156  

Other operating receivables

  4,306  (39) 4,267   5,214     (69)   5,145  

Deferred income tax

  94  —    94   214     —    214  

Prepaid expenses

  745  —    745   638     —    638  

Other current assets

  43  —    43   45     —    45  

Other current assets

  7,286  (39) 7,247   8,267     (69)   8,198  

Changes in the valuation allowance on “Accounts receivable” and “Other current assets” are as follows:

 

(in M€)  Valuation
allowance as of
January 1,		  Increase (net)  Currency translation
adjustments and
other variations		  Valuation
allowance as of
December 31,		 

Accounts receivable

             

2008

  (482) 9  13  (460)

2007

  (489) (25) 32  (482)

2006

  (562) 6  67  (489)

Other current assets

 

             

2008

  (27) 7  1  (19)

2007

  (39) (4) 16  (27)

2006

  (63) (1) 25  (39)
(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) 

As of December 31, 2008,2011, the net portion of the past dueoverdue 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 includes in “Accounts receivable” and “Other current assets” is€3,141 million, of which€1,885 million has expired for less than 90 days,€292 million has expired between 90 days and 6 months,€299 million has expired between 6 and 12 months and€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 3,744 M€,3,610 million, of which 2,420 M€2,116 million has been overdueexpired for less than 90 days, 729 M€486 million has expired between 90 days and 6 months, 54 M€246 million has expired between 6 and 12 months and 541 M€762 million has expired for more than 12 months.

17)SHAREHOLDERS’ EQUITY

NUMBER OFNumber of TOTAL SHARESshares

The Company’s common shares, par value€2.50, as of December 31, 20082011 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), 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.

The authorized share capital amounts to 3,413,204,0253,446,401,650 shares as of December 31, 20082011 compared to 4,042,585,6053,439,391,697 shares as of December 31, 20072010 and 4,081,629,7943,381,921,458 as of December 31, 2006.2009.


Variation of the share capital

 

        Historical figures  Restated
historical
figures(a)		 

As of January 1, 2006

     615,116,296  2,460,465,184 

Shares issued in connection with:

  Four-for-one stock split of share par value  1,845,348,888  
  Capital increase reserved for employees  11,141,320  11,141,320 
  Exercise of TOTAL share subscription options  849,319  849,319 
  Exchange guarantee offered to the beneficiaries of Elf Aquitaine share subscription options  332,130  332,130 

Cancellation of shares(b)

    (47,020,000) (47,020,000)

As of January 1, 2007

     2,425,767,953  2,425,767,953 

Shares issued in connection with:

  Exercise of TOTAL share subscription options  2,453,832  
  Exchange guarantee offered to the beneficiaries of Elf Aquitaine share subscription options  315,312  

Cancellation of shares(c)

    (33,005,000) 

As of January 1, 2008

     2,395,532,097    

Shares issued in connection with:

  

Capital increase reserved for employees

  4,870,386  
  Exercise of TOTAL share subscription options  1,178,167  
  Exchange guarantee offered to the beneficiaries of Elf Aquitaine share subscription options  227,424  

Cancellation of shares(d)

    (30,000,000) 

As of December 31, 2008(e)

     2,371,808,074    

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, 2010

2,348,422,884

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 employees8,902,717
Exercise of TOTAL share subscription options5,223,665

As of December 31, 2011(b)

2,363,767,313

 

(a)Historical figures are restated to take into account the four-for-one stock split on May 18, 2006.
(b)Decided by the Board of Directors on July 18, 2006.30, 2009.
(c)Decided by the Board of Directors on January 10, 2007.
(d)Decided by the Board of Directors on July 31, 2008.
(e)(b)Including 143,082,095109,554,173 treasury shares deducted from consolidated shareholders’ equity.

The calculationvariation of theboth weighted-average number of shares and weighted-average number of diluted shares respectively used forin the presentationcalculation of the earnings per share and the dilutedfully-diluted earnings per share respectively is detailed as follows:

 

  2008 2007 2006(a)   2011 2010 2009 
Number of shares as of January 1,  2,395,532,097 2,425,767,953 2,460,465,184    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

  742,588  1,020,190  304,461    3,412,123    412,114    221,393  

Exercise of TOTAL share purchase options

  2,426,827  4,141,186  3,756,803    —    984,800    93,827  

Exchange guarantee offered to the beneficiaries of Elf Aquitaine share subscription options

  86,162  163,074  169,146    —    —    393,623  

TOTAL restricted shares

  1,112,393  1,114,796  —   

TOTAL performance shares

   978,503    416,420    1,164,389  

Global free TOTAL share plan(a)

   506    15    —  

Capital increase reserved for employees

  3,246,924  —    9,284,433    5,935,145    —    —  

TOTAL shares held by TOTAL S.A. or by its subsidiaries and deducted from shareholders’ equity

  (168,290,440) (176,912,968) (180,916,837)   (112,487,679)   (115,407,190)   (143,082,095) 

Weighted-average number of shares

  2,234,856,551  2,255,294,231  2,293,063,190    2,247,479,529    2,234,829,043    2,230,599,211  

Dilutive effect

         —  

TOTAL share subscription and purchase options

  6,784,200  13,698,928  14,758,984    470,095    1,758,006    1,711,961  

TOTAL restricted shares

  4,172,944  4,387,761  3,218,410 

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

  460,935  655,955  833,908    —    —    60,428  

Capital increase reserved for employees

  383,912  348,109  430,160    303,738    371,493    —  

Weighted-average number of diluted shares

  2,246,658,542  2,274,384,984  2,312,304,652    2,256,951,403    2,244,494,576    2,237,292,199  

 

(a)Figures are restated to take into account the four-for-one stock splitThe Board of Directors approved on May 18, 2006.21, 2010 the implementation and conditions of a global free share plan intended for the Group employees.

 

CAPITAL INCREASE RESERVED FOR GROUP EMPLOYEESCapital increase reserved for Group employees

At the shareholders’ meeting held on May 11, 2007,21, 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 wasis being specified that the amount of any such capital increase reserved for Group employees would bewas counted against the

aggregate maximum nominal amount of share capital increases authorized by the shareholders’ meeting held on May 11, 200721, 2010 for issuing new ordinary shares or other securities granting immediate or future access to the Company’s share capital with preferential subscription rights (4 B(€2.5 billion in nominal value).

Pursuant to this delegation of authorization, the Board of Directors, during its November 6, 2007October 28, 2010 meeting, implementeddecided to proceed with a first capital increase reserved for employees in 2011 within the limit of 12 million shares par value€2.50, at a price of€44.40 per share, with dividend rights as of the January 1, 2007. The2010 and delegated to the Chairman and Chief Executive Officer all powers to determine the opening and closing of the subscription period wasand the subscription price.

open

On March 14, 2011, the Chairman and Chief Executive Officer decided that the subscription period would be set from March 10, 2008,16, 2011 to March 28, 2008,April 1, 2011 included, and 4,870,386 newacknowledged 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 issued in 2008.subscribed and created on April 28, 2011.

SHARE CANCELLATIONShare 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 31, 200830, 2009 to cancel 30,000,00024,800,000 shares acquired in 20072008 at an average price of€54.6949.28 per share.

TREASURY SHARESTreasury shares (TOTAL SHARES HELD BYshares held by TOTAL S.A.)

As of December 31, 2008,2011, TOTAL S.A held 42,750,827S.A. holds 9,222,905 of its own shares, representing 1.80%0.39% of its share capital, detailed as follows:

 

12,627,5226,712,528 shares allocated to coveringTOTAL share grant plans for Group employees;

2,510,377 shares intended to be allocated to new TOTAL share purchase option plans for Group employees;or to new share grant plans.

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.


These shares are deducted from the consolidated shareholders’ equity.

As of December 31, 2007,2010, TOTAL S.A. held 51,089,96412,156,411 of its own shares, representing 2.13%0.52% of its share capital, detailed as follows:

 

16,343,3496,012,460 shares allocated to coveringTOTAL share grant plans for Group employees;

6,143,951 shares intended to be allocated to new TOTAL share purchase option plans for Group employees;

4,746,615 shares allocatedor to TOTAL restrictednew share plans for Group employees; and

30,000,000 shares purchased for cancellation between February and December 2007 pursuant to the authorization granted by the shareholders’ meetings held on May 12, 2006 and May 11, 2007. The Board of Directors on July 31, 2008 decided to cancel these 30,000,000 shares acquired at an average price of€54.69 per share.grant plans.

These shares were deducted from the consolidated shareholders’ equity.

As of December 31, 2006,2009, TOTAL S.A. held 60,869,43915,075,922 of its own shares, representing 2.51%0.64% of its share capital, detailed as follows:

 

23,272,7556,017,499 shares allocated to covering TOTAL share purchase option plans for Group employees;employees and executive officers;

4,591,6845,799,400 shares allocated to TOTAL restricted share grant plans for Group employees; and

33,005,0003,259,023 shares purchased for cancellation between July and December 2006 pursuantintended to the authorization granted by the shareholders’ meetings held on May 12, 2006. The Board of Directors decided on January 10, 2007be allocated to cancel 33,005,000 shares, at an average price of€52.52 per share.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 THE GROUP SUBSIDIARIESshares held by Group subsidiaries

As of December 31, 2008, 20072011, 2010 and 2006,2009, TOTAL S.A. held indirectly through its subsidiaries 100,331,268 of its own shares, representing 4.23%4.24% of its share capital as of December 31, 2008, 4.19%2011, 4.27% of its share capital as of December 31, 2007,2010 and 4.14%4.27% of its share capital as of December 31, 2006,2009 detailed as follows:

 

2,023,672 shares held by a consolidated subsidiary, Total Nucléaire, a wholly-owned subsidiary100% 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.

DIVIDENDDividend

In 2008, TOTAL S.A. paid on May 23, 2008,26, 2011 the balance of the dividend of€1.07 per share for the 2007 fiscal year (the ex-dividend date was May 20, 2008.). In addition, TOTAL S.A. paid on November 19, 2008, an interim dividend of€1.14 per share for the 2010 fiscal year 2008 (the ex-dividend date was November 14, 2008)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 15, 200911, 2012 to pay a dividend of€2.28 per share for the 20082011 fiscal year,i.e., a balance of€1.140.57 per share to be distributed after deducting the three quarterly interim dividenddividends of€1.140.57 per share that will have already been paid.

PAID-IN SURPLUSPaid-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 or simultaneously with this item.

As of December 31, 2008,2011, paid-in surplus amounted to 28,284 M€ (29,59827,655 million (€27,208 million as of December 31, 2007,2010 and 31,156 M€27,171 million as of December 31, 2006)2009).

RESERVESReserves

Under French laws,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 70 M€539 million as of December 31, 2008 (70 M2011 (€514 million as of December 31, 20062010 and 2007)as of December 31, 2009).


ITEMS RECOGNIZED DIRECTLY IN EQUITYOther comprehensive income

Shareholders’Detail of other comprehensive income showing items reclassified from equity to net income is directly debited for 772 M€presented in 2008 duethe 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 the following items. Items recognized directly in equityeach component of other comprehensive income are as follows:

 

For the year ended(M€)  2008   2007  2006 

Currency translation adjustment, Group share

  (480)  (3,013) (2,595)

Changes in fair value of financial assets available for sale

  (224)  104  (61)

Others

  (34)  13  24 

Group share

  (738)  (2,896) (2,632)

Minority interests

  (34)  (111) (44)

Total items recognized directly in equity

  (772)  (3,007) (2,676)
    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€)  2008  2007  2006  2011   2010   2009 

Pension benefits liabilities

  1,187  1,721  1,918   1,268     1,268     1,236  

Other benefits liabilities

  608  611  647   620     605     592  

Restructuring reserves (early retirement plans)

  216  195  208   344     298     212  

Total

  2,011  2,527  2,773   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€)  2008  2007  2006  2008  2007  2006 

Change in benefit obligation

       

Benefit obligation at beginning of year

  8,129  8,742  9,647  583  648  774 

Service cost

  143  160  174  14  12  11 

Interest cost

  416  396  392  24  28  30 

Curtailments

  (3) (9) (6) —    —    (1)

Settlements

  (5) (20) (243) (4) —    —   

Special termination benefits

  —    —    —    —    —    —   

Plan participants’ contributions

  12  10  11  —    —    —   

Benefits paid

  (463) (448) (444) (37) (40) (36)

Plan amendments

  12  (70) 17  (12) (2) 7 

Actuarial losses (gains)

  (248) (384) (151) (27) (38) (21)

Foreign currency translation and other(a)

  (588) (248) (655) 3  (25) (116)

Benefit obligation at year-end

  7,405  8,129  8,742  544  583  648 

Change in fair value of plan assets

       

Fair value of plan assets at beginning of year

  (6,604) (6,401) (6,274) —    —    —   

Expected return on plan assets

  (402) (387) (353) —    —    —   

Actuarial losses (gains)

  1,099  140  (104) —    —    —   

Settlements

  2  8  201  —    —    —   

Plan participants’ contributions

  (12) (10) (11) —    —    —   

Employer contributions(b)

  (855) (556) (617) —    —    —   

Benefits paid

  375  349  327  —    —    —   

Foreign currency translation and other(c)

  633  253  430  —    —    —   

Fair value of plan assets at year-end

  (5,764) (6,604) (6,401) —    —    —   

Unfunded status

  1,641  1,525  2,341  544  583  648 

Unrecognized prior service cost

  (48) (49) (149) 21  18  23 

Unrecognized actuarial (losses) gains

  (953) (160) (423) 43  10  (24)

Asset ceiling

  5  5  4  —    —    —   

Net recognized amount

  645  1,321  1,773  608  611  647 

Pension benefits and other benefits liabilities

  1,187  1,721  1,918  608  611  647 

Other non-current assets

  (542) (400) (145) —    —    —   

(a)In 2006, the variation in foreign currency translation and other included the spin-off of Arkema which amounted to (587) M€ for benefit obligation and 375 M€ for fair value of plan assets related to pension benefits, and (107) M€ for benefit obligation related to other pension benefits.
(b)In 2008, the Group covered certain employee pension benefit plans through insurance companies for an amount of 757 M€ (269 M€ in 2006).
(c)In 2006, the variation in foreign currency translation and other included the spin-off of Arkema which amounted to 375 M€ of fair value of plan assets.

    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, 2008,2011, the fair value of pension benefits and other pension benefits which are entirely or partially funded amountedamounts to 6,515 M€8,277 million and the present value of the unfunded benefits amountedamounts to 1,434 M€ (7,175 M1,673 million (against€7,727 million and 1,537 M€,1,636 million respectively as of December 31, 2007,2010 and 7,358 M€7,206 million and 2,032 M€,1,510 million respectively as of December 31, 2006)2009).

The experience actuarial gains (losses)(gains) losses related to the defined benefit obligation and the fair value of plan assets are as follows:

 

For the year ended(M€)  2008  2007 

Experience actuarial gains (losses) related to the defined benefit obligation

  (12) (80)

Experience actuarial gains (losses) related to the fair value of plan assets

  (1,099) (140)
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€)  2008 2007 2006 2005 2004   2011 2010 2009 2008 2007 

Pension benefits

            

Benefit obligation

  7,405  8,129  8,742  9,647  8,117    9,322    8,740    8,169    7,405    8,129  

Fair value of plan assets

  (5,764) (6,604) (6,401) (6,274) (5,362)   (7,028)   (6,809)   (6,286)   (5,764)   (6,604) 

Unfunded status

  1,641  1,525  2,341  3,373  2,755    2,294    1,931    1,883    1,641    1,525  

Other benefits

            

Benefits obligation

  544  583  648  774  675    628    623    547    544    583  

Fair value of plan assets

  —    —    —    —    —      —    —    —    —    —  

Unfunded status

  544  583  648  774  675    628    623    547    544    583  

The Group expects to contribute 82 M€182 million to its pension plans in 2009.2012.

 

Estimated future payments

(M€)

  Pension benefits  Other benefits

2009

  518  35

2010

  497  36

2011

  494  37

2012

  501  37

2013

  527  39

2014-2018

  2,652  180
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  Pension benefits 
As of December 31,(M€)  2008  2007  2006
As of December 31,  2011 2010 2009 

Equity securities

  25%  36%  42%   29%   34%   31%  

Debt securities

  56%  56%  48%   64%   60%   62%  

Monetary

  16%  4%  6%   4%   3%   3%  

Real estate

  3%  4%  4%   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 high qualityprime corporate bonds based onaccording to a benchmark per country of different market data on the closing date.

 

Assumptions used to determine benefits obligations  Pension benefits    Other benefits  Pension benefits Other benefits 
As of December 31,(M€)  2008  2007  2006     2008  2007  2006

Discount rate

  5.93%  5.50%  4.69%    6.00%  5.50%  4.89%
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

  4.56%  4.29%  4.14%    —    —    —       4.69%   4.55%   4.50%   —    —    —  

Expected rate of healthcare inflation

                       

— initial rate

  —    —    —      4.88%  5.16%  5.57%     —    —    —    4.82%   4.82%   4.91%  

— ultimate rate

  —    —    —       3.64%  3.64%  3.65%      —    —    —    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%  

Assumptions used to determine the net periodic

benefit cost (income)

  Pension benefits      Other benefits
As of December 31,(M€)  2008  2007  2006     2008  2007  2006

Discount rate

  5.50%  4.69%  4.51%    5.50%  4.89%  4.56%

Average expected rate of salary increase

  4.29%  4.14%  3.63%    —    —    —  

Expected return on plan assets

  6.60%  6.26%  6.14%    —    —    —  

Expected rate of healthcare inflation

              

— initial rate

  —    —    —      5.16%  5.57%  5.41%

— ultimate rate

  —    —    —       3.64%  3.65%  4.00%

A 0,5%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, 2008

  (420) 475

Net periodic benefit cost (income)

  (30) 37
(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 10%0.5% increase or decrease in the fair value ofexpected return on plan assets –rate — all other things being equal –— would have the following approximate impact:an impact of€31 million on 2012 net periodic benefit cost (income).

(M€)  10%
increase		  10%
decrease		 

Fair value of plan assets as of December 31, 2008

  576  (576)

Net periodic benefit cost (income)

  (86) 105 

The components of the net periodic benefit cost (income) in 2008, 20072011, 2010 and 20062009 are:

 

  Pension benefits      Other benefits   Pension benefits Other benefits 
As of December 31,(M€)  2008 2007 2006    2008 2007 2006 
For the year ended December 31, (M€)  2011 2010 2009 2011 2010 2009 

Service cost

  143  160  174    14  12  11    163    159    134    13    11    10  

Interest cost

  416  396  392    24  28  30    420    441    428    28    29    30  

Expected return on plan assets

  (402) (387) (353)   —    —    —      (385)   (396)   (343)   —    —    —  

Amortization of prior service cost

  34  31  41    (10) (5) (2)   58    74    13    2    (5)   (7) 

Amortization of actuarial losses (gains)

  22  17  26    (2) (1) (2)   46    66    50    —    (4)   (6) 

Asset ceiling

  1  —    —      —    —    —      2    (3)   4    —    —    —  

Curtailments

  (3) (8) (4)   —    —    (1)   (22)   (3)   (4)   (1)   (3)   (1) 

Settlements

  (2) (12) (15)   (3) (1) —      (9)   7    (1)   —    —    —  

Special termination benefits

  —    —    —      —    —    —      —    —    —    —    1    —  

Net periodic benefit cost (income)

  209  197  261    23  33  36    273    345    281    42    29    26  

Net periodic benefit cost (income) from continuing operations

  209  197  256    23  33  35 

Net periodic benefit cost (income) from discontinued operations

  —    —    5    —    —    1 

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, 2008

  69  (52)

Net periodic benefit cost (income)

  6  (4)

(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€)  2008  2007  2006  2011   2010   2009 

Litigation and accrued penalty claims

  546  601  497

Litigations and accrued penalty claims

   572     485     423  

Provisions for environmental contingencies

  558  552  574   600     644     623  

Asset retirement obligations

  4,500  4,206  3,893   6,884     5,917     5,469  

Other non-current provisions

  1,804  1,188  1,215   1,099     1,116     1,331  

Other non-current liabilities

  450  296  288   1,754     936     1,535  

Total

  7,858  6,843  6,467   10,909     9,098     9,381  

 

In 2008,2011, litigation reserves mainly include a provision covering risks concerning antitrust investigations related to Arkema amounting to 85 M€17 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 include the contingency reserve related to the Toulouse-AZF plant explosion (civil liability) for 256 M€ as of December 31, 2008.

In 2007, litigation reserves included a provision covering risks concerning antitrust investigations related to Arkema amounting to 138 M€ as of December 31, 2007.2011. Other risks and commitments that give rise to contingent liabilities are described in Note 32 to the Consolidated Financial Statements.

In 2007,2011, 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 134 M€31 million as of December 31, 2007; and2010;

Provisions related to restructuring activities in the Downstream and Chemicals segmentsegments for 49 M€261 million as of December 31, 2007.2010; 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 2006,2009, litigation reserves mainly included a provision covering risks concerning antitrust investigations related to Arkema amounting to 138 M€43 million as of December 31, 2006.2009. Other risks and commitments that give rise to contingent liabilities are described in Note 32 to the Consolidated Financial Statements.

In 2006, the2009, 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 176 M€ as of December 31, 2006; and10 million;

Provisions related to restructuring activities in the Chemicals segment for 72 M€ as of December 31, 2006.


CHANGES IN PROVISIONS AND OTHER NON-CURRENT LIABILITIES

(M€)  As of January 1,  Allowances  Reversals  Currency
translation
adjustment		  Other  As of December 31,

2008

  6,843  1,424  (864) (460) 915  7,858

2007

  6,467  747  (927) (303) 859  6,843

2006

  7,051  884  (821) (273) (374) 6,467

 

In 2008, allowances of the period (1,424 M€) mainly include:

asset retirement obligations for 229 M€ (accretion);

theThe contingency reserve related to the Toulouse-AZF plantBuncefield depot explosion (civil liability), written back for 140 M€;

environmental contingencies for 89 M€;

an allowance of 48 M€ for litigation reserves in connection with antitrust investigations, as described in Note 32 to the Consolidated Financial Statements “Other risks and contingent liabilities”;116 million; and

provisions related toProvisions for restructuring of activitiesand social plans written back for 27 M€.164 million.

In 2007, allowances2010, reversals of the period (747 M(€)971 million) were mainly included:related to the following incurred expenses:

 

provisionsProvisions for asset retirement obligations for 189 M€ (accretion);214 million;

an allowance of 100 M€ for litigation reserves in connection with antitrust investigations, as described in Note 32 to the Consolidated Financial Statements “Other risks and contingent liabilities”;


environmental contingencies in the Chemicals segment for 23 M€; and

provisions related to restructuring of activities in the Chemicals segment for 15 M€.

In 2006, allowances of the period (884 M€) mainly included:

 

provisions for asset retirement obligations for 182 M€ (accretion);

an additional allowance of the contingency reserve related to the Toulouse-AZF plant explosion (civil liability), for 100 M€;

environmental contingencies in the Chemicals segment for 96 M€;

provisions related to restructuring of activities in the Chemicals segment for 88 M€; and

an allowance of 32 M€ for litigation reserves in connection with antitrust investigations, as described in Note 32 to the Consolidated Financial Statements “Other risks and contingent liabilities”.

In 2008, the main reversals of the period (864 M€) relate to the incurred expenses, which mainly include:

provisions for asset retirement obligations for 280 M€;

163 M€26 million for litigation reserves in connection with antitrust investigations;

environmentalEnvironmental contingencies written back for 96 M€;66 million;

theThe contingency reserve related to the Toulouse-AZF plant explosion (civil liability), written back for 18 M€;9 million;

The contingency reserve related to the Buncefield depot explosion (civil liability), written back for€190 million; and

provisionsProvisions for restructuring and social plans written back for 10 M€.60 million.

In 2007, the main2009, reversals of the period (927 M(€)1,413 million) were mainly related to the following incurred expenses which mainly included:expenses:

 

provisionsProvisions for asset retirement obligations for 209 M€;191 million;

environmental€52 million for litigation reserves in connection with antitrust investigations;

Environmental contingencies in the Chemicals segment written back for 52 M€;86 million;

theThe contingency reserve related to the Toulouse-AZF plant explosion (civil liability), written back for 42 M€;216 million;

The contingency reserve related to the Buncefield depot explosion (civil liability), written back for€375 million; and

provisionsProvisions for restructuring and social plans written back for 37 M€.

In 2006, the main reversals of the period (821 M€) were related to the incurred expenses, which mainly included:

provisions for asset retirement obligations for 174 M€;

the contingency reserve related to the Toulouse-AZF plant explosion (civil liability), written back for 57 M€;

environmental contingencies in the Chemicals segment written back for 56 M€; and

provisions for restructuring and social plans written back for 43 M€.28 million.


 

CHANGES IN THE ASSET RETIREMENT OBLIGATIONChanges 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,

2008

  4,206  229  563  188  (280) (414) 8  4,500

2007

  3,893  189  203  371  (209) (206) (35) 4,206

2006

  3,710  182  66  274  (174) (191) 26  3,893

(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, 2008(M€)  Secured  Unsecured  Total 

(Assets)/Liabilities

     

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, net of hedging instruments

  —    13,667  13,667 

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)NON-CURRENT FINANCIAL DEBT AND RELATED FINANCIAL INSTRUMENTS

 

As of December 31, 2007(M€)  Secured  Unsecured  Total 

(Assets)/Liabilities

     

Non-current financial debt

  772  14,104  14,876 

of which hedging instruments of non-current financial debt (liabilities)

  —    369  369 

Hedging instruments of non-current financial debt (assets)(a)

  —    (460) (460)

Non-current financial debt - net of hedging instruments

  772  13,644  14,416 

Bonds, net of hedging instruments

  —    11,650  11,650 

Bank and other, floating rate

  453  1,781  2,234 

Bank and other, fixed rate

  2  213  215 

Financial lease obligations

  317  —    317 

Non-current financial debt - net of hedging instruments

  772  13,644  14,416 

As of December 31, 2006(M€)  Secured  Unsecured Total 
(Assets)/Liabilities      
As of December 31, 2011 (M€)
(Assets) / Liabilities		  Secured   Unsecured Total 

Non-current financial debt

  771  13,403  14,174    349     22,208    22,557  

of which hedging instruments of non-current financial debt (liabilities)

  —    193  193    —     146    146  

Hedging instruments of non-current financial debt (assets)(a)

  —    (486) (486)   —     (1,976)   (1,976) 

Non-current financial debt - net of hedging instruments

  771  12,917  13,688 

Bonds, net of hedging instruments

  —    11,120  11,120 

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

  398  1,589  1,987    129     446    575  

Bank and other, fixed rate

  2  208  210    76     206    282  

Financial lease obligations

  371  —    371    144     8    152  

Non-current financial debt - net of hedging instruments

  771  12,917  13,688 

Non-current financial debt — net of hedging instruments

   349     20,232    20,581  

 

(a)See the description of these hedging instruments in NoteNotes 1 paragraph M(iii) “Long-term financing” and Notes, 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, 2008,2011, after taking into account hedging currency and interest rates swaps, can beis detailed as follows:

 

    Fair value after hedging as of         
(M€) Year of
issue		 December 31,
2008		 December 31,
2007		 December 31,
2006		 Currency Maturity Initial rate before
hedging instruments
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

 1996 —  324  362  FRF 2008 6.750%

Bond

 1997 —  —  75  FRF 2007 5.030%

Bond

 1997 —  —  63  ESP 2007 6.800%

Bond

 1997 124  118  126  FRF 2009 6.200%

Bond

 1998 —  26  29  FRF 2008 Pibor 3 months + 0.380%

Bond

 1998 119  113  132  FRF 2009 5.125%

Bond

 1998 121  114  128  FRF 2013 5.000%   1998     129     125     116    FRF     2013    5.000%

Bond

 2000 63  60  68  EUR 2010 5.650%   2000     —     —     61    EUR     2010    5.650%

Current portion (less than one year)

  (243) (349) (138)         —     —     (61)        

Total parent company

 184  406  845        129     125     116         

Elf Aquitaine S.A.

       

Bond

 1999 1,003  998  996  EUR 2009 4.500%

Current portion (less than one year)

  (1,003) —  —    

Total Elf Aquitaine S.A.

 —  998  996  

 

    Fair value after hedging as of         
(M€) Year of
issue		 December 31,
2008		 December 31,
2007		 December 31,
2006		 Currency Maturity 

Initial rate before

hedging instruments

TOTAL CAPITAL       
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 — — 276 CHF 2007 3.000%   2002     15     15     14     USD     2012    5.890%

Bond

 2002 — — 183 CHF 2007 3.000%   2003     —     —     160     CHF     2010    2.385%

Bond

 2002 — — 101 CHF 2007 2.500%   2003     23     22     21     USD     2013    4.500%

Bond

 2002 — — 174 GBP 2007 5.000%   2004     —     —     53     CAD     2010    4.000%

Bond

 2002 — — 90 GBP 2007 5.000%   2004     —     —     113     CHF     2010    2.385%

Bond

 2002 — — 57 USD 2007 4.740%   2004     —     —     438     EUR     2010    3.750%

Bond

 2002 — — 228 USD 2007 5.125%   2004     —     —     322     GBP     2010    4.875%

Bond

 2002 14 14 15 USD 2012 5.890%   2004     —     —     128     GBP     2010    4.875%

Bond

 2002 — — 190 USD 2007 4.750%   2004     —     —     185     GBP     2010    4.875%

Bond

 2002 — — 38 USD 2007 LIBOR USD 3 months + 0.060%   2004     —     57     53     AUD     2011    5.750%

Bond

 2002 — — 38 USD 2007 LIBOR USD 3 months + 0.065%   2004     —     116     107     CAD     2011    4.875%

Bond

 2003 — 39 43 AUD 2008 5.000%

Bond

 2003 — 41 46 AUD 2008 5.000%

Bond

 2003 52 49 55 AUD 2009 6.250%

Bond

 2003 — 44 50 CAD 2008 4.250%

Bond

 2003 — 148 165 CHF 2008 2.010%

Bond

 2003 154 145 162 CHF 2009 2.385%

Bond

 2003 — 98 110 CHF 2008 2.010%

Bond

 2003 166 157 175 CHF 2010 2.385%

Bond

 2003 — 360 402 EUR 2008 3.500%

Bond

 2003 — 72 81 EUR 2008 3.500%

Bond

 2003 — 113 127 EUR 2008 3.500%

Bond

 2003 — — 61 GBP 2007 5.000%

Bond

 2003 22 20 23 USD 2013 4.500%

Bond

 2003 — 170 190 USD 2008 3.250%

Bond

 2003-2004 395 373 418 USD 2009 3.500%

Bond

 2004 57 54 60 AUD 2009 6.000%

    Fair value after hedging as of         
(M€) Year of
issue		 December 31,
2008		 December 31,
2007		 December 31,
2006		 Currency Maturity 

Initial rate before

hedging instruments

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 28 26 29 AUD 2009 6.000%   2004     —     235     203     USD     2011    4.125%

Bond

 2004 55 52 58 AUD 2011 5.750%   2004     —     75     69     USD     2011    4.125%

Bond

 2004 55 52 58 CAD 2010 4.000%   2004     129     125     116     CHF     2012    2.375%

Bond

 2004 111 105 118 CAD 2011 4.875%   2004     52     51     47     NZD     2014    6.750%

Bond

 2004 117 110 123 CHF 2010 2.385%   2005     —     57     53     AUD     2011    5.750%

Bond

 2004 120 114 127 CHF 2012 2.375%   2005     —     60     56     CAD     2011    4.000%

Bond

 2004 454 429 479 EUR 2010 3.750%   2005     —     120     112     CHF     2011    1.625%

Bond

 2004 334 316 353 GBP 2010 4.875%   2005     —     226     226     CHF     2011    1.625%

Bond

 2004 132 125 140 GBP 2010 4.875%   2005     —     139     144     USD     2011    4.125%

Bond

 2004 191 181 202 GBP 2010 4.875%   2005     63     63     63     AUD     2012    5.750%

Bond

 2004 — — 103 GBP 2007 5.000%   2005     200     194     180     CHF     2012    2.135%

Bond

 2004 49 46 51 NZD 2014 6.750%   2005     65     65     65     CHF     2012    2.135%

Bond

 2004 — 34 38 USD 2008 3.250%   2005     97     97     97     CHF     2012    2.375%

Bond

 2004 — 34 38 USD 2008 3.250%   2005     404     391     363     EUR     2012    3.250%

Bond

 2004 — 68 76 USD 2008 3.250%   2005     57     57     57     NZD     2012    6.500%

Bond

 2004 216 204 228 USD 2011 4.125%   2006     —     —     75     GBP     2010    4.875%

Bond

 2004 72 68 76 USD 2011 4.125%   2006     —     —     50     EUR     2010    3.750%

Bond

 2005 55 52 58 AUD 2011 5.750%   2006     —     —     50     EUR     2010    3.750%

Bond

 2005 63 63 63 AUD 2012 5.750%   2006     —     —     100     EUR     2010    3.750%

Bond

 2005 58 55 61 CAD 2011 4.000%   2006     —     42     42     EUR     2011    EURIBOR

3 months

+0.040%

Bond

 2005 187 177 197 CHF 2012 2.135%   2006     —     300     300     EUR     2011    3.875%

Bond

 2005 116 109 122 CHF 2011 1.625%   2006     —     150     150     EUR     2011    3.875%

Bond

 2005 65 65 65 CHF 2012 2.135%   2006     —     300     300     EUR     2011    3.875%

Bond

 2005 226 226 226 CHF 2011 1.625%   2006     —     120     120     USD     2011    5.000%

Bond

 2005 98 97 97 CHF 2012 2.375%   2006     —     300     300     EUR     2011    3.875%

Bond

 2005 376 356 397 EUR 2012 3.250%   2006     —     472     472     USD     2011    5.000%

Bond

 2005 287 286 284 GBP 2012 4.625%   2006     62     62     62     AUD     2012    5.625%

Bond

 2005 36 34 38 USD 2009 3.500%   2006     72     72     72     CAD     2012    4.125%

Bond

 2005 144 136 152 USD 2011 4.125%   2006     100     100     100     EUR     2012    3.250%

Bond

 2005 57 57 57 NZD 2012 6.500%   2006     74     74     74     GBP     2012    4.625%

Bond

 2006 130 130 130 CHF 2016 2.385%   2006     100     100     100     EUR     2012    3.250%

Bond

 2006 62 62 62 AUD 2012 5.625%   2006     125     125     125     CHF     2013    2.510%

Bond

 2006 72 72 72 CAD 2012 4.125%   2006     127     127     127     CHF     2014    2.635%

Bond

 2006 100 100 100 EUR 2012 3.250%   2006     130     130     130     CHF     2016    2.385%

Bond

 2006 — — 147 GBP 2007 5.000%   2006     65     65     65     CHF     2016    2.385%

Bond

 2006 65 65 65 CHF 2016 2.385%   2006     64     64     64     CHF     2016    2.385%

Bond

 2006 64 64 64 CHF 2016 2.385%   2006     63     63     63     CHF     2016    2.385%

Bond

 2006 64 64 63 CHF 2016 2.385%   2006     129     129     129     CHF     2018    3.135%

Bond

 2006 129 129 129 CHF 2018 3.135%   2007     —     —     60     CHF     2010    2.385%

Bond

 2006 102 100 100 EUR 2010 3.750%   2007     —     —     74     GBP     2010    4.875%

Bond

 2006 74 74 74 GBP 2012 4.625%   2007     —     77     77     USD     2011    5.000%

Bond

 2006 300 300 300 EUR 2011 3.875%   2007     370     370     370     USD     2012    5.000%

Bond

 2006 50 50 50 EUR 2010 3.750%   2007     222     222     222     USD     2012    5.000%

Bond

 2006 127 127 127 CHF 2014 2.635%   2007     61     61     61     AUD     2012    6.500%

Bond

 2006 473 474 474 USD 2011 5.000%   2007     72     72     72     CAD     2012    4.125%

Bond

 2006 100 100 100 EUR 2012 3.250%   2007     71     71     71     GBP     2012    4.625%

Bond

 2006 42 42 42 EUR 2011 EURIBOR 3 months +0.040%   2007     300     300     300     EUR     2013    4.125%

Bond

 2006 300 300 300 EUR 2011 3.875%   2007     73     73     73     GBP     2013    5.500%

Bond

 2006 150 150 151 EUR 2011 3.875%   2007     306     306     306     GBP     2013    5.500%

Bond

 2006 120 120 120 USD 2011 5.000%   2007     72     72     72     GBP     2013    5.500%

Bond

 2006 75 75 74 GBP 2010 4.875%   2007     248     248     248     CHF     2014    2.635%

Bond

 2006 50 50 50 EUR 2010 3.750%   2007     31     31     31     JPY     2014    1.505%

Bond

 2006 300 300 300 EUR 2011 3.875%   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,
    Fair value after hedging as of         
(M€) Year of
issue		 December 31,
2008		 December 31,
2007		 December 31,
2006		 Currency Maturity 

Initial rate before

hedging instruments

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

 2006 125 126 126 CHF 2013 2.510%   2007     60     60     60     CHF     2018    3.135%

Bond

 2007 300 301  EUR 2013 4.125%   2008     —     —     63     GBP     2010    4.875%

Bond

 2007 306 305  GBP 2013 5.500%   2008     —     —     66     GBP     2010    4.875%

Bond

 2007 77 77  USD 2011 5.000%   2008     —     92     92     AUD     2011    7.500%

Bond

 2007 248 248  CHF 2014 2.635%   2008     —     100     100     EUR     2011    3.875%

Bond

 2007 370 371  USD 2012 5.000%   2008     —     150     150     EUR     2011    3.875%

Bond

 2007 73 74  GBP 2013 5.500%   2008     —     50     50     EUR     2011    3.875%

Bond

 2007 61 61  AUD 2012 6.500%   2008     —     50     50     EUR     2011    3.875%

Bond

 2007 300 302  EUR 2017 4.700%   2008     —     60     60     JPY     2011    EURIBOR
6 months
+ 0.018%

Bond

 2007 74 74  GBP 2010 4.875%   2008     —     102     102     USD     2011    3.750%

Bond

 2007 222 222  USD 2012 5.000%   2008     62     62     62     CHF     2012    2.135%

Bond

 2007 49 49  JPY 2014 1.723%   2008     124     124     124     CHF     2012    3.635%

Bond

 2007 121 122  CHF 2015 3.125%   2008     46     46     46     CHF     2012    2.385%

Bond

 2007 76 76  CHF 2018 3.135%   2008     92     92     92     CHF     2012    2.385%

Bond

 2007 71 71  GBP 2012 4.625%   2008     64     64     64     CHF     2012    2.385%

Bond

 2007 61 61  CHF 2014 2.635%   2008     50     50     50     EUR     2012    3.250%

Bond

 2007 74 73  GBP 2013 5.500%   2008     63     63     63     GBP     2012    4.625%

Bond

 2007 72 72  CAD 2012 4.125%   2008     63     63     63     GBP     2012    4.625%

Bond

 2007 60 60  CHF 2010 2.385%   2008     63     63     63     GBP     2012    4.625%

Bond

 2007 60 60  CHF 2018 3.135%   2008     62     62     62     NOK     2012    6.000%

Bond

 2007 31 31  JPY 2014 1.505%   2008     69     69     69     USD     2012    5.000%

Bond

 2008 92   AUD 2011 7.500%   2008     60     60     60     AUD     2013    7.500%

Bond

 2008 60   AUD 2013 7.500%   2008     61     61     61     AUD     2013    7.500%

Bond

 2008 61   AUD 2013 7.500%   2008     128     127     127     CHF     2013    3.135%

Bond

 2008 62   CHF 2012 2.135%   2008     62     62     62     CHF     2013    3.135%

Bond

 2008 124   CHF 2012 3.635%   2008     200     200     200     EUR     2013    4.125%

Bond

 2008 46   CHF 2012 2.385%   2008     100     100     100     EUR     2013    4.125%

Bond

 2008 92   CHF 2012 2.385%   2008     1,000     1,000     1,000     EUR     2013    4.750%

Bond

 2008 64   CHF 2012 2.385%   2008     63     63     63     GBP     2013    5.500%

Bond

 2008 128   CHF 2013 3.135%   2008     149     149     149     JPY     2013    EURIBOR
6 months
+ 0.008%

Bond

 2008 63   CHF 2013 3.135%   2008     191     191     191     USD  ��  2013    4.000%

Bond

 2008 61   CHF 2015 3.135%   2008     61     61     61     CHF     2015    3.135%

Bond

 2008 62   CHF 2015 3.135%   2008     62     62     62     CHF     2015    3.135%

Bond

 2008 62   CHF 2015 3.135%   2008     61     61     61     CHF     2015    3.135%

Bond

 2008 62   CHF 2018 3.135%   2008     62     62     62     CHF     2018    3.135%

Bond

 2008 100   EUR 2011 3.875%   2009     56     56     56     AUD     2013    5.500%

Bond

 2008 151   EUR 2011 3.875%   2009     54     54     54     AUD     2013    5.500%

Bond

 2008 50   EUR 2012 3.250%   2009     236     236     236     CHF     2013    2.500%

Bond

 2008 200   EUR 2013 4.125%   2009     77     77     77     USD     2013    4.000%

Bond

 2008 100   EUR 2013 4.125%   2009     131     131     131     CHF     2014    2.625%

Bond

 2008 1,002   EUR 2013 4.750%   2009     998     997     998     EUR     2014    3.500%

Bond

 2008 50   EUR 2011 3.875%   2009     150     150     150     EUR     2014    3.500%

Bond

 2008 50   EUR 2011 3.875%   2009     40     40     40     HKD     2014    3.240%

Bond

 2008 63   GBP 2012 4.625%   2009     107     103     96     AUD     2015    6.000%

Bond

 2008 63   GBP 2010 4.875%   2009     550     550     550     EUR     2015    3.625%

Bond

 2008 66   GBP 2010 4.875%   2009     684     684     684     USD     2015    3.125%

Bond

 2008 63   GBP 2012 4.625%   2009     232     224     208     USD     2015    3.125%

Bond

 2008 64   GBP 2012 4.625%   2009     99     99     99     CHF     2016    2.385%

Bond

 2008 63   GBP 2013 5.500%   2009     115     115     115     GBP     2017    4.250%

Bond

 2008 60   JPY 2011 EURIBOR 6 months +0.018%   2009     225     225     225     GBP     2017    4.250%

Bond

 2008 149   JPY 2013 EURIBOR 6 months +0.008%   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,
    Fair value after hedging as of          
(M€) Year of
issue		 December 31,
2008		 December 31,
2007		 December 31,
2006		 Currency Maturity 

Initial rate before

hedging instruments

 
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

 2008 62    NOK 2012 6.000%   2010     773    748    —    USD     2016    2.300%

Bond

 2008 102    USD 2011 3.750%   2010     491    476    —    EUR     2022    3.125%

Bond

 2008 69    USD 2012 5.000%   2011     116    —    —    USD     2016    6.500%

Bond

 2008 194    USD 2013 4.000%   2011     597    —    —    USD     2018    3.875%

Current portion (less than one year)

 (722) (1,222) (1,686)       (2 992)   (3 450)   (1,937)        

Total TOTAL CAPITAL(a)

  13,380  10,136  9,206    
       

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

 103  110  73       308    223    153       

Total

 13,667  11,650  11,120  

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 S.A. is a wholly-owned indirect subsidiary of the CompanyTOTAL S.A. (with the exception of one share each held by the memberseach member of its Board of Directors, as required under French law)Directors). It acts as a financing vehicle for the Group. Its debt securities are fully and unconditionally guaranteed by the CompanyTOTAL 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, 2008

(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		  %

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%

As of December 31, 2007
(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		  %

2009

  2,137  6  (114) 2,023  14%

2010

  2,767  16  (207) 2,560  18%

2011

  3,419  123  (65) 3,354  23%

2012

  3,517  90  (30) 3,487  24%

2013 and beyond

  3,036  134  (44) 2,992  21%

Total

  14,876  369  (460) 14,416  100%

As of December 31, 2006

(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		  %

2008

  2,604  4  (245) 2,359  17%

2009

  2,320  14  (82) 2,238  16%

2010

  3,083  2  (104) 2,979  22%

2011

  3,177  75  (20) 3,157  23%

2012 and beyond

  2,990  98  (35) 2,955  22%

Total

  14,174  193  (486) 13,688  100%

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€)  2008  %  2007  %  2006  %  2011   %   2010   %   2009   % 

U.S. Dollar

  3,990  26%  4,700  33%  6,981  51%   8,645     42%     7,248     39%     3,962     21%  

Euro

  10,685  70%  8,067  56%  5,382  39%   9,582     47%     11,417     60%     14,110     77%  

Other currencies

  624  4%  1,649  11%  1,325  10%   2,354     11%     248     1%     340     2%  

Total

  15,299  100%  14,416  100%  13,688  100%   20,581     100%     18,913     100%     18,412     100%  

 

As of December 31,(M€)  2008  %  2007  %  2006  %  2011   %   2010   %   2009   % 

Fixed rate

  633  4%  893  6%  896  7%   4,854     24%     3,177     17%     2,064     11%  

Floating rate

  14,666  96%  13,523  94%  12,792  93%   15,727     76%     15,736     83%     16,348     89%  

Total

  15,299  100%  14,416  100%  13,688  100%   20,581     100%     18,913     100%     18,412     100%  

B) CURRENT FINANCIAL ASSETS AND LIABILITIES

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  2008  2007  2006 

Current financial debt

  5,586  2,530  3,348 

Current portion of non-current financial debt

  2,136  2,083  2,510 

Current borrowings

  7,722  4,613  5,858 

Current portion of financial instruments for interest rate swaps liabilities

  12  1  —   

Other current financial instruments - liabilities

  146  59  75 

Other current financial liabilities(note 28)

  158  60  75 

Current deposits beyond three months

  (1) (850) (3,496)

Current portion of financial instruments for interest rate swaps - assets

  (100) (388) (341)

Other current financial instruments - assets

  (86) (26) (71)

Current financial assets(note 28)

  (187) (1,264) (3,908)

Current borrowings and related financial assets and liabilities, net

  7,693  3,409  2,025 
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  

C) NET-DEBT-TO-EQUITY RATIO

(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. Shareholders’Adjusted shareholders’ equity as offor the year ended December 31, 20082011 is calculated after distributionpayment of a dividend of 2.28€2.28 per share, of which 1.14€ per share was paidsubject to approval by the shareholders’ meeting on November 19, 2008.May 11, 2012.

The net-debt-to-equity ratio is calculated as follows:

 

As of December 31,(M€)             
(Assets)/Liabilities  2008  2007  2006 

Current borrowings

  7,722  4,613  5,858 

Other current financial liabilities

  158  60  75 

Current financial assets

  (187) (1,264) (3,908)

Non-current financial debt

  16,191  14,876  14,174 

Hedging instruments of non-current financial debt

  (892) (460) (486)

Cash and cash equivalents

  (12,321) (5,988) (2,493)

Net financial debt

  10,671  11,837  13,220 

Shareholders’ equity - Group share

  48,992  44,858  40,321 

Estimated dividend payable

  (2,540) (2,397) (2,258)

Minority interest

  958  842  827 

Total shareholder’s equity

  47,410  43,303  38,890 

Net-debt-to-equity ratio

  22.5%  27.3%  34.0% 

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€)  2008  2007  2006  2011   2010   2009 

Accruals and deferred income

  151  137  163   231     184     223  

Payable to States (including taxes and duties)

  6,256  7,860  7,204   8,040     7,235     6,024  

Payroll

  928  909  879   1,062     996     955  

Other operating liabilities

  4,297  3,900  4,263   5,441     3,574     4,706  

Total

  11,632  12,806  12,509   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,
2008(M€)		  Operating
leases		  Finance
leases		 

2009

  429  47 

2010

  306  42 

2011

  243  42 
For the year ended December 31,
2011 (M€)		  Operating
leases		   Finance
leases		 

2012

  208  42    762     41  

2013

  166  40    552     40  

2014 and beyond

  675  148 

2014

   416     37  

2015

   335     36  

2016

   316     34  

2017 and beyond

   940     20  

Total minimum payments

  2,027  361    3,321     208  

Less financial expenses

     (70)   —     (31) 

Nominal value of contracts

     291    —     177  

Less current portion of finance lease contracts

     (23)   —     (25) 

Outstanding liability of finance lease contracts

     268    —     152  

 

For the year ended December 31,
2007(M€)		  Operating
leases		  Finance
leases		 

2008

  427  50 

2009

  352  47 

2010

  291  46 

2011

  210  46 

2012

  149  47 

2013 and beyond

  492  154 

Total minimum payments

  1,921  390 

Less financial expenses

     (47)

Nominal value of contracts

     343 

Less current portion of finance lease contracts

     (26)

Outstanding liability of finance lease contracts

     317 
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,
2006(M€)		  Operating
leases		  Finance
leases		 

2007

  381  52 

2008

  378  56 

2009

  307  56 
For the year ended December 31,
2009 (M€)		  Operating
leases		   Finance
leases		 

2010

  246  51    523     42  

2011

  153  54    377     43  

2012 and beyond

  422  218 

2012

   299     42  

2013

   243     41  

2014

   203     39  

2015 and beyond

   894     128  

Total minimum payments

  1,887  487    2,539     335  

Less financial expenses

     (87)   —     (53) 

Nominal value of contracts

     400    —     282  

Less current portion of finance lease contracts

     (29)   —     (22) 

Outstanding liability of finance lease contracts

     371    —     260  

Net rental expense incurred under operating leases for the year ended December 31, 2008, was 426 M2011 is€ (383 M645 million (against€605 million in 20072010 and 380 M€613 million in 2006)2009).


23)COMMITMENTS AND CONTINGENCIES

 

  Maturity and installments  Maturity and installments 
As of December 31, 2008(M€)  Total  Less than
1 year		  

Between

1 and 5 years

  More than
5 years

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)

  15,031  —    13,064  1,967   20,429     —     13,121     7,308  

Current portion of non-current debt obligations net of hedging instruments(Note 20)

  2,025  2,025  —    —     3,488     3,488     —     —  

Finance lease obligations(Note 22)

  291  23  142  126   177     25     134     18  

Asset retirement obligations(Note 19)

  4,500  154  653  3,693   6,884     272     804     5,808  

Contractual obligations recorded in the balance sheet

  21,847  2,202  13,859  5,786   30,978     3,785     14,059     13,134  

Operating lease obligations(Note 22)

  2,027  429  923  675   3,321     762     1,619     940  

Purchase obligations

  60,226  4,420  13,127  42,679   77,353     11,049     20,534     45,770  

Contractual obligations not recorded in the balance sheet

  62,253  4,849  14,050  43,354   80,674     11,811     22,153     46,710  

Total of contractual obligations

  84,100  7,051  27,909  49,140   111,652     15,596     36,212     59,844  

Guarantees given for excise taxes

  1,720  1,590  58  72   1,765     1,594     73     98  

Collateral given against borrowings

  2,870  1,119  519  1,232

Guarantees given against borrowings

   4,778     3,501     323     954  

Indemnities related to sales of businesses

  39  3  1  35   39     —     34     5  

Guarantees of current liabilities

  315  119  164  32   376     262     35     79  

Guarantees to customers / suppliers

  2,866  68  148  2,650   3,265     1,634     57     1,574  

Letters of credit

  1,080  1,024  17  39   2,408     1,898     301     209  

Other operating commitments

  648  246  132  270   2,477     433     697     1,347  

Total of other commitments given

  9,538  4,169  1,039  4,330   15,108     9,322     1,520     4,266  

Mortgages and liens received

  321  72  110  139   408     7     119     282  

Goods and services sale obligations(a)

   62,216     4,221     17,161     40,834  

Other commitments received

  4,218  2,440  234  1,544   6,740     4,415     757     1,568  

Total of commitments received

  4,539  2,512  344  1,683   69,364     8,643     18,037     42,684  

 

    Maturity and installments
As of December 31, 2007(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)

  14,099  —    11,251  2,848

Current portion of non-current debt obligations net of hedging instruments(Note 20)

  1,669  1,669  —    —  

Finance lease obligations(Note 22)

  343  26  173  144

Asset retirement obligations(Note 19)

  4,206  189  503  3,514

Contractual obligations recorded in the balance sheet

  20,317  1,884  11,927  6,506

Operating lease obligations(Note 22)

  1,921  427  1,002  492

Purchase obligations

  61,794  3,210  15,419  43,165

Contractual obligations not recorded in the balance sheet

  63,715  3,637  16,421  43,657

Total of contractual obligations

  84,032  5,521  28,348  50,163

Guarantees given for excise taxes

  1,796  590  58  1,148

Collateral given against borrowings

  781  9  624  148

Indemnities related to sales of businesses

  40  —    3  37

Guarantees of current liabilities

  97  16  48  33

Guarantees to customers/suppliers

  1,197  23  6  1,168

Letters of credit

  1,677  1,677  —    —  

Other operating commitments

  1,280  207  151  922

Total of other commitments given

  6,868  2,522  890  3,456

Mortgages and liens received

  353  7  69  277

Other commitments received

  3,887  2,781  377  729

Total of commitments received

  4,240  2,788  446  1,006
(a)As from December 31, 2011, the Group discloses its goods and services sale obligations.

  Maturity and installments  Maturity and installments 
As of December 31, 2006(M€)  Total  Less than
1 year		  Between
1 and 5 years		  

More than

5 years

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)

  13,317  —    10,548  2,769   18,738     —     12,392     6,346  

Current portion of non-current debt obligations net of hedging instruments(Note 20)

  2,140  2,140  —    —     3,483     3,483     —     —  

Finance lease obligations(Note 22)

  400  29  185  186   198     23     129     46  

Asset retirement obligations(Note 19)

  3,893  221  576  3,096   5,917     177     872     4,868  

Contractual obligations recorded in the balance sheet

  19,750  2,390  11,309  6,051   28,336     3,683     13,393     11,260  

Operating lease obligations(Note 22)

  1,887  381  1,084  422   2,948     582     1,261     1,105  

Purchase obligations

  37,327  3,551  9,696  24,080   61,293     6,347     14,427     40,519  

Contractual obligations not recorded in the balance sheet

  39,214  3,932  10,780  24,502   64,241     6,929     15,688     41,624  

Total of contractual obligations

  58,964  6,322  22,089  30,553   92,577     10,612     29,081     52,884  

Guarantees given for excise taxes

  1,807  587  22  1,198   1,753     1,594     71     88  

Collateral given against borrowings

  1,079  16  691  372

Guarantees given against borrowings

   5,005     1,333     493     3,179  

Indemnities related to sales of businesses

  113  38  40  35   37     —     31     6  

Guarantees of current liabilities

  68  21  15  32   171     147     19     5  

Guarantees to customers/suppliers

  1,544  150  181  1,213

Guarantees to customers / suppliers

   3,020     1,621     96     1,303  

Letters of credit

  1,416  1,416  —    —     1,250     1,247     —     3  

Other operating commitments

  1,127  107  205  815   2,057     467     220     1,370  

Total of other commitments given

  7,154  2,335  1,154  3,665   13,293     6,409     930     5,954  

Mortgages and liens received

  329  11  77  241   429     2     114     313  

Other commitments received

  2,965  2,089  315  561   6,387     3,878     679     1,830  

Total of commitments received

  3,294  2,100  392  802   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

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 issue swaps and swaps hedging bonds, and excludes non-current finance lease obligations of 268 M€.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 issue swaps and swaps hedging bonds, and excludes the current portion of finance lease obligations of 23 M€.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

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 companiessubsidiaries 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, 2008,2011, 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 theoil industry and indemnities specific to a transactiontransactions such as salesales of a business.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 companiessubsidiaries

The Group also guarantees the current liabilities of certain non-consolidated companies.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 thirdother parties. These commitments are often entered into for commercial purposes, for regulatory purposes andor 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 companiessubsidiaries and equity affiliates) are detailed as follows:

 

Balance sheet

As of December 31,(M€)

  

2008

  

2007

  

2006

As of December 31, (M€)  2011   2010   2009 

Balance sheet

      

Receivables

            

Debtors and other debtors

  244  277  411   585     432     293  

Loans (excl. loans to equity affiliates)

  354  378  457   331     315     438  

Payables

            

Creditors and other creditors

  136  460  424   724     497     386  

Debts

  50  28  25   31     28     42  

Statement of income

For the year ended
December 31,(M€)

  

2008

  

2007

  

2006

  
 
For the year ended December 31, (M€)  2011   2010   2009 

Statement of income

      

Sales

  3,082  2,635  1,996   4,400     3,194     2,183  

Purchases

  4,061  3,274  3,123   5,508     5,576     2,958  

Financial expense

  —    —    —     —     69     1  

Financial income

  114  29  60   79     74     68  

Compensation for the administration and management bodies

The aggregate amount paid directly or indirectlyof direct and indirect compensation accounted for by the French and foreign affiliates of the Company as compensation tofor the executive officers of TOTAL (the members of the Management Committee and the Treasury)Treasurer) and tofor the members of the Board of Directors who are employees of the Group, is detailed as follows:

 

For the year ended December 31,
(M€)		  2008  2007  2006

Number of people

  30  30  32

Direct or indirect compensation

  20.4  19.9  19.8

Share-based payment expense (IFRS 2)(a)

  16.6  18.4  16.6

Pension expenses(b)

  11.9  12.2  14.0
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.
(b)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 98.0 M€ provisioned as of December 31, 2008, against 102.9 M€ as of December 31, 2007 and 113.2 M€ as of December 31, 2006.

The compensation allocated to members of the Board of Directors for directors’ fees totaled 0.83 M€1.07 million in 2008 (0.82 M2011 (€0.96 million in 20072010 and 0.82 M€0.97 million in 2006)2009).


25) SHARE BASEDSHARE-BASED PAYMENTS

A. TOTAL SHARE SUBSCRIPTION OPTIONS PLANS

 

   2003 Plan(a)  2004 Plan(b)  2005 Plan(c)  2006 Plan(d)  2007 Plan(e)  2008 Plan(f)  Total  

Weighted-

average

exercise

price

Exercise price until May 23, 2006 included(g)

 33.30  39.85  49.73      

Exercise price since May 24, 2006(g)

 32.84  39.30  49.04  50.60  60.10  42.90   

Expiration date

 07/16/2011  07/20/2012  07/19/2013  07/18/2014  07/17/2015  10/09/2016      

Number of options(h)

                       

Outstanding options as of January 1, 2006

 11,196,796  13,411,320  6,094,080           30,702,196  39.42

Granted

 —    —    134,400  5,727,240    5,861,640  50.58

Cancelled

 (22,200) (57,263) (43,003) (1,080)   (123,546) 41.74

Adjustment following the spin-off of Arkema(i)

 163,180  196,448  90,280  —      449,908  

Exercised

 (729,186) (120,133) —    —          (849,319) 33.85

Outstanding options as of January 1, 2007

 10,608,590  13,430,372  6,275,757  5,726,160        36,040,879  40.89

Granted

 —    —    —    —    5,937,230   5,937,230  60.10

Cancelled

 (22,138) (20,093) (11,524) (13,180) (17,125)  (84,060) 44.94

Exercised

 (2,218,074) (213,043) (20,795) (1,920) —       (2,453,832) 33.55

Outstanding 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

Outstanding options as of December 31, 2008

 7,501,348  12,767,177  6,191,704  5,651,056  5,885,445  4,443,810  42,440,540  44.35
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)Grants approved by the Board of Directors on July 16, 2003 pursuant to the authorization given by the shareholders’ meeting held on May 17, 2001. The options are exercisable only after a two-year period fromgrant date is the date of the Board meeting awarding the share subscription options, and must be exercised within eight years from this date. Underlying shares may not be soldexcept for four years from the dategrant of grant.October 9, 2008, decided by the Board on September 9, 2008.
(b)Grants approved by the Board of Directors on July 20, 2004 pursuant to the authorization given by the shareholders’ meeting held on May 14, 2004. The options are exercisable only after a two-year period from the date of the Board meeting awarding the options and must be exercised within eight years from this date. Underlying shares may not be sold for four years from the date of grant.
(c)Grants approved by the Board of Directors on July 19, 2005 pursuant to the authorization given by the shareholders’ meeting held on May 14, 2004. The options are exercisable only after a two-year period from the date of the Board meeting awarding the options and must be exercised within eight years from this date. Underlying shares may not be sold for four years from the date of grant.
(d)Grants approved by the Board of Directors on July 18, 2006 pursuant to the authorization given by the shareholders’ meeting held on May 14, 2004. The options are exercisable only after a two-year period from the date of the Board meeting awarding the options and must be exercised within eight years from this date. Underlying shares may not be sold for four years from the date of grant.
(e)Grants approved by the Board of Directors on July 17, 2007 pursuant to the authorization given by the shareholders’ meeting held on May 11, 2007. The options are exercisable only after a two-year period from the date of the Board meeting awarding the options and must be exercised within eight years from this date. Underlying shares may not be sold for four years from the date of grant. Beneficiaries working for a non-French subsidiary as of July 17, 2007 are authorized to transfer the shares issued upon exercise of options starting from July 18, 2009. Furthermore, the Board of Directors decided that for each beneficiary of more than 25,000 stock options, one third of the options granted in excess of this number will definitely be awarded following the two-year vesting period, under a performance condition based on the return on equity of the Group and calculated on the Consolidated Financial Statements of the Group for the fiscal year 2008. The performance condition states that the grant rate is null if the return on equity is less than or equal to 10%, varies on a straight-line basis between 0% and 80% if the return on equity is more than 10% and less than 18%, varies on a straight-line basis between 80% and 100% if the return on equity is more than or equal to 18% and less than 30%, and is equal to 100% if the return on equity is more than or equal to 30%
(f)Grants on October 9, 2008 approved by the Board of Directors on September 9, 2008 pursuant to the authorization given by the shareholders’ meeting held on May 11, 2007. The options are exercisable only after a two-year period from the date of the Board meeting awarding the options and must be exercised within eight years from this date. Underlying shares may not be sold for four years from the date of grant. Beneficiaries working for a non-French subsidiary as of October 9, 2008, are authorized to transfer the shares issued upon exercise of options starting from October 10, 2010. Furthermore, the Board of Directors decided that for each beneficiary of more than 25,000 stock options, one third of the options granted in excess of this number will finally be awarded following the two-year vesting period, under a performance condition based on the return on equity of the Group and calculated on the Consolidated Financial Statements of the Group for the fiscal year 2009 (performance condition described in footnote (e) above).
(g)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 with effecteffective as of May 24, 2006.
(h)(c)The number of options awarded, outstanding, cancelledcanceled or exercised before May 23, 2006 included, was multiplied by four to reflecttake into account the four-for-one stock split approved by the shareholders’ meeting on May 12, 2006.
(i)(d)Adjustments approved byOut of 92,472 options awarded under the Board of Directors on March 14, 2006, in application of Articles 174-9, 174-12 and 174-132008 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 decree No. 67-236 of March 23, 1967 in force during this Board of Directors and during TOTAL S.A. shareholders’ meeting of May 12, 2006, as part2008 Plan was 60%.
(e)Out of the spin-off930,089 options canceled in 2011, 738,534 options that were not exercised expired due to the expiry of Arkema. These adjustments have been madethe 2003 subscription option Plan on May 22, 2006 with effect as of May 24, 2006.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.

B. TOTAL SHARE PURCHASE OPTIONS PLANS2011 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:

 

   1998 Plan(a)  1999 Plan(b)  2000 Plan(c)  2001 Plan(d)  2002 Plan(e)  Total  

Weighted-

average

exercise

price

Exercise price until May 23, 2006 included(f)

 23.44  28.25  40.68  42.05  39.58   

Exercise price since May 24, 2006(f)

  27.86  40.11  41.47  39.03   

Expiration date

 03/17/2006  06/15/2007  07/11/2008  07/10/2009  07/09/2010      

Number of options(g)

                    

Outstanding options as of January 1, 2006

 589,652  2,052,432  6,509,944  8,735,900  11,283,480  29,171,408  39.44

Granted

 —    —    —    —    —    —    —  

Cancelled(h)

 (72,692) —    (7,272) (15,971) (26,694) (122,629) 30.20

Adjustment following the spin-off of Arkema(i)

 —    25,772  84,308  113,704  165,672  389,456  

Exercised

 (516,960) (707,780) (1,658,475) (1,972,348) (2,141,742) (6,997,305) 37.87

Outstanding options as of January 1, 2007

 —    1,370,424  4,928,505  6,861,285  9,280,716  22,440,930  39.33

Granted

  —    —    —    —    —    —  

Cancelled

  (138,023) (3,452) (7,316) (7,104) (155,895) 29.28

Exercised

  (1,232,401) (1,782,865) (1,703,711) (2,210,429) (6,929,406) 37.92

Outstanding options as of January 1, 2008

    —    3,142,188  5,150,258  7,063,183  15,355,629  40.07

Granted

   —    —    —    —    —  

Cancelled

   (480,475) (3,652) (13,392) (497,519) 40.09

Exercised

   (2,661,713) (455,180) (598,934) (3,715,827) 40.10

Outstanding options as of December 31, 2008

       —    4,691,426  6,450,857  11,142,283  40.06

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)Grants approved by the Board of Directors on March 17, 1998 pursuant to the authorization given by the shareholders’ meeting held on May 21, 1997. The optionsOptions were exercisable, onlysubject to a continued employment condition, after a five-year3.5-year vesting period from the date of the Board meeting awarding the options and had toexpired 8 years after this date. The underlying shares may not be exercised within eight yearstransferred during the 4-year period from this date.the date of the grant. This plan expired on March 17, 2006.July 10, 2009.
(b)Grants approved by the Board of Directors on June 15, 1999 pursuant to the authorization given by the shareholders’ meeting held on May 21, 1997. The optionsOptions were exercisable, onlysubject to a continued employment condition, after a five-year2-year vesting period from the date of the Board meeting awarding the options and had to be exercised within eightexpired 8 years fromafter this date. The underlying shares may not be transferred during the 4-year period from the date of the grant. This plan has expired on June 15, 2007.July 9, 2010.
(c)Grants approved by the Board of Directors on July 11, 2000 pursuant to the authorization given by the shareholders’ meeting held on May 21, 1997. The options were exercisable only after a four-year period fromgrant date is the date of the Board meeting awarding the options and has to be exercised within eight years from this date. For beneficiaries holding contracts with French companies or working in France, the shares arising from the exercise of options may not be sold for five years from the date of grant. This plan expired on July 11, 2008.options.
(d)Grants approved by the Board of Directors on July 10, 2001 pursuant to the authorization given by the shareholders’ meeting held on May 17, 2001. The options are exercisable only after January 1, 2005 and must be exercised within eight years from the date of grant. For beneficiaries holding contracts with French companies or working in France, the shares arising from the exercise of options may not be sold for four years from the date of grant. Underlying shares may not be sold for four years from the date of grant.
(e)Grants approved by the Board of Directors on July 9, 2002 pursuant to the authorization given by the shareholders’ meeting held on May 17, 2001. The options are exercisable only after a two-year period from the date of the Board meeting awarding the options and must be exercised within eight years from this date. Underlying shares may not be sold for four years from the date of grant.
(f)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 with effecteffective as of May 24, 2006.
(g)(e)The number of options awarded, outstanding, cancelledcanceled or exercised before May 23, 2006 included, was multiplied by four to reflecttake into account the four-for-one stock split approved by the shareholders’ meeting on May 12, 2006.
(h)(f)Including the confirmation in 2006 by the CompanyOut of the award4,671,989 options canceled in 2010, 4,671,145 options that were not exercised expired due to the expiry of 500 stock options, par value€10, that had been cancelled erroneously in 2001 (Plan 2000).the 2002 purchase option Plan on July 9, 2010.

(i)C.Adjustments approved by the Board of Directors on March 14, 2006 in application of Articles 174-9, 174-12 and 174-13 of the decree n°67-236 of March 23, 1967 in force during this Board of Directors and during TOTAL S.A. shareholders’ meeting of May 12, 2006, as part of the spin-off of Arkema. These adjustments have been made on May 22, 2006 with effect as of May 24, 2006.EXCHANGE GUARANTEE GRANTED TO THE HOLDERS OF ELF AQUITAINE SHARE SUBSCRIPTION OPTIONS

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 (19(nineteen TOTAL shares for 13thirteen 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 Eurolist by 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.

AsThis exchange guarantee expired on September 12, 2009, due to the expiry of December 31, 2008, a maximumthe Elf Aquitaine share subscription option plan No. 2 of 101,6811999. Subsequently, no Elf Aquitaine shares either outstanding or to be created, wereare covered by this guarantee, as follows:the exchange guarantee.


D.TOTAL PERFORMANCE SHARE GRANTS

 

Elf Aquitaine subscription plan(a)  1999 Plan
n°1		  1999 Plan
n°2		  Total  Weighted-
average
exercise
price(b)

Exercise price until May 23, 2006 included(b)

  115.60  171.60    

Exercise price since May 24, 2006(b)

  114.76  170.36    

Expiration date

  03/30/2009  09/12/2009      

Outstanding position as of December 31, 2008

  90,342  6,044  96,386  118.25
Outstanding Elf Aquitaine shares covered by the exchange guarantee as of December 31, 2008  5,295  —    5,295  114.76
Total of Elf Aquitaine shares, either outstanding or to be created, covered by the exchange guarantee for TOTAL shares as of December 31, 2008  95,637  6,044  101,681   
TOTAL shares likely to be created within the scope of the application of the exchange guarantee as of December 31, 2008  573,822  36,264  610,086   
   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)AdjustmentsThe grant date is the date of the numberBoard of options approvedDirectors meeting that awarded the shares, except for the shares awarded by the Board of Directors at their meeting of Elf AquitaineSeptember 9, 2008, and granted on March 10, 2006 in application of articles 174-9, 174-12 and 174-13 of the decree No. 67-236 of March 23, 1967 in force on March 10, 2006 and during Elf Aquitaine shareholders’ meeting on May 10, 2006 , as part of the spin-off of SDA. These adjustments have been made on May 22, 2006 with effect as of May 24, 2006.October 9, 2008.
(b)Exercise price in euro. To take into accountPerformance shares finally granted following the spin-offdeath of S.D.A., the exercise prices of Elf Aquitaine share subscription options were multiplied by an adjustment factor equal to 0.992769 with effect on May 24, 2006.

Thus, as of December 31, 2008, at most 610,086 shares of the Group were likely to be created as part of the application of this exchange guarantee.

D. TOTAL restricted share grants

    2005 Plan(a)(b)  2006 Plan(c)  2007 Plan(d)  2008 Plan(e)  Total 

Date of grant(f)

  07/19/2005  07/18/2006  07/17/2007  10/9/2008    

Number of restricted shares

                

Outstanding as of January 1, 2006

  2,274,528           2,274,528 

Notified

  —    2,275,364    2,275,364 

Cancelled

  (7,432) (3,068)   (10,500)

Finally granted

  —    —          —   

Outstanding as of January 1, 2007

  2,267,096  2,272,296        4,539,392 

Notified

  —    —    2,366,365   2,366,365 

Cancelled

  (38,088) (6,212) (2,020)  (46,320)

Finally granted(g)

  (2,229,008) (2,128) (1,288)    (2,232,424)

Outstanding as of January 1, 2008

  —    2,263,956  2,363,057     4,627,013 

Notified

  —    —    —    2,791,968  2,791,968 

Cancelled(h)

  2,840  (43,822) (29,504) (19,220) (89,706)

Finally granted(g)(h)

  (2,840) (2,220,134) (336) —    (2,223,310)

Outstanding as of December 31, 2008

  —    —    2,333,217  2,772,748  5,105,965 

(a)Grants approved by the Board of Directors on July 19, 2005 pursuant to the authorization given by the shareholders’ meeting held on May 17, 2005. The grant of these shares, which have been bought back in 2005 by the Company on the market, became final after a two-year vesting period (acquisition of the right to restricted shares) on July 20, 2007, and after fulfilling the performance condition (see below). The Board of Directors on May 3, 2007 noticed that the acquisition rate, linked to the performance condition amounted to 100%. Moreover, the transfer of the restricted shares, that were definitely granted, will not be permitted between the date of final grant and the end of a two-year mandatory holding period, i.e. from July 20, 2009.
(b)The number of restricted shares was multiplied by four to take into account the four-for-one stock split approved by the shareholders’ meeting on May 12, 2006.their beneficiaries.
(c)Grants approved by the Board of Directors on July 18, 2006 pursuant to the authorization given by the shareholders’ meeting held on May 17, 2005. The grant of these shares, which were bought back in 2006 by the Company on the market, became final after a two-year vesting period (acquisition of the right to restricted shares) on July 19, 2008, subject to aIncluding performance condition (see below). The Board of Directors on May 6, 2008 noticed that the acquisition rate, linked to the performance condition amounted to 100%. Moreover, the transfer of the restricted shares, that were finally granted, will not be permitted between the date of final grant and the end of a two-year mandatory holding period, i.e. from July 19, 2010.
(d)Grants approved by the Board of Directors on July 17, 2007 pursuant to the authorization given by the shareholders’ meeting held on May 17, 2005. The grant of these shares, which were bought back in 2007 by the Company on the market, will become final after a two-year vesting period (acquisition of the right to restricted shares) on July 18, 2009, subject to a performance condition (see below). Moreover, the transfer of the restricted shares, that might hence be finally granted, will not be permitted between the date of final grant and the end of a two-year mandatory holding period, i.e. from July 18, 2011.
(e)Grants on October 9, 2008, approved by the Board of Directors on September, 9 2008 pursuant to the authorization given by the shareholders’ meeting held on May 16, 2008. The grant of these shares, which have been bought back in 2008 by the Company on the market, will become final after a two-year vesting period (acquisition of the right to restricted shares) on October 10, 2010, subject to a performance condition (see below). Moreover, the transfer of the restricted shares, that might hence be finally granted, will not be permitted between the date of final grant and the end of a two-year mandatory holding period on October 10, 2012.
(f)The grant date corresponds to the date of the Board of Directors that approved the grant of restricted shares, except for the grant of restricted shares approved by the Board of Directors on September, 9 2008 that decided the grant of restricted shares on October 9, 2008.
(g)Restricted shares finally granted following the death of their beneficiaries (2005, 2006 and 2007 Plans for fiscal year 2007, and Plan 2007 for fiscal year 2008).
(h)For the 2005 Plan: restricted shares finally granted for which the entitlement right had been cancelledcanceled 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 2006, 20072011 Plan, the Board of Directors decided that, for each senior executive (other than the Chairman and 2008 Plans,Chief Executive Officer), the restricted share grants areshares will be finally granted subject to a performance condition. This condition which states that the number of restricted shares finally granted is based on the Return On Equity (ROE) ofaverage ROE as published by the Group.

The ROE isGroup and calculated based on the Group’s consolidated accounts published by TOTALbalance sheet and related to thestatement of income for fiscal year preceding the final grant.

Thisyears 2011 and 2012. The acquisition rate:

 

is equal to zero if the average ROE is less than or equal to 10%7%;

varies on a straight-line basis between 0% and 80%100% if the average ROE is moregreater than 10%7% 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 average ROE is moregreater than or equal to 30%18%.

The 2005 Plan wasBoard 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 athe performance condition that statedmentioned 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 of the restricted shares granted wasis equal to zero if the average ROE for 2006 wasis less than 10%,or equal to 100% if the ROE was more than 20%, and varied7%; 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 ROE1996 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 between 10%$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 20%.restricted stock activities thereafter:

E. SHARE-BASED PAYMENT EXPENSE

    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 2008 amounted2011 amounts to 154 M€178 million and can beis broken down as follows:

 

61 M€27 million for TOTAL share subscription plans;

105 M€134 million for TOTAL restricted shares plans; and


(12) M€17 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).SunPower plans.

Share-based payment expense before tax for the year 20072010 amounted to 196 M€140 million and can bewas broken down as follows:

 

65 M€31 million for TOTAL share subscription plans; and

109 M€109 million for TOTAL restricted shares plans;

22 M€ for TOTAL capital increase reserved for employees (see Note 17 to the Consolidated Financial Statements).plans.

Share-based payment expense before tax for the year 20062009 amounted to 157 M€106 million and can bewas broken down as follows:

 

74 M€38 million for TOTAL share subscription plans; and

83 M€68 million for TOTAL restricted shares plans.

The fair value of the options granted in 2008, 20072011, 2010 and 20062009 has been measured according to the Black-Scholes method and based on the following assumptions:

 

For the year ended December 31,  2008  2007  2006  2011   2010   2009 

Risk free interest rate (%)(a)

  4.3  4.9  4.1   2.0     2.1     2.9  

Expected dividends (%)(b)

  8.4  3.9  4.2   5.6     5.9     4.8  

Expected volatility (%)(c)

  32.7  25.3  29.3   27.5     25.0     31.0  

Vesting period (years)

  2  2  2   2     2     2  

Exercise period (years)

  8  8  8

Exercice period (years)

   8     8     8  

Fair value of the granted options
(€ per option)

  5.0  13.9  11.3   4.4     5.8     8.4  

 

(a)6-year zeroZero coupon Euro swap rate.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 Chief 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 nontransferabilitynon-transferability of the shares that could be subscribed by the employees over a period of five years. The valuation method of nontransferabilitynon-transferability of the shares is based on a strategy

cost in two steps consisting, first, in a five years forward sale of the nontransferablenon-transferable shares, and second, in purchasing the same number of shares in cash with a loan financing reimbursablein fine “in fine”. During the year 2007,2011, the main

assumptions used for the valuation of the cost of capital increase reserved for employees arewere the following:

 

For the year ended December 31,  20072011

Date of the Board of Directors meeting that decided the issue

  November 6, 2007October 28, 2010

Subscription price (€)

  44.434.80

Share price at the reference date of the Board meeting (€)

54.6

Number of shares (in millions)(a)

  10.641.60

Number of shares (in millions)

8.90

Risk free interest rate (%)(b)

  4.12.82

Employees loan financing rate (%)(c)

  7.57.23

Non transferability cost (% of the reference’s share price at the date of the Board meeting)price)

  14.9

Expense amount (€ per share)

17.6		  2.1

 

(a)The estimated expense as of December 31, 2007 was based on aShare price at the date which the Chairman and Chief Executive Officer decided the subscription of the capital increase reserved for employees for 10.6 million shares. The subscription was opened from March 10 to 28, 2008 included, leading to the creation of 4,870,386 TOTAL shares in 2008 (see Note 17 to the Consolidated Financial Statements).period.
(b)The risk-free interestZero coupon Euro swap rate is based on the French Treasury bonds rate for the appropriate maturity.at 5 years.
(c)The employees loan financing rate is based on a 5 year5-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,(M€)		  2008  2007  2006

Personnel expenses(a)

      
For the year ended
December 31,		  2011   2010   2009 

Personnel expenses (M€)

      

Wages and salaries (including social charges)

  6,014  6,058  5,828   6,579     6,246     6,177  

Group employees(a)

            

France

            

• Management

  10,688  10,517  10,313   11,123     10,852     10,906  

• Other

  26,413  26,779  27,518   23,914     24,317     25,501  

International

            

• Management

  14,709  14,225  13,263   15,713     15,146     15,243  

• Other

  45,149  44,921  43,976   45,354     42,540     44,737  

Total

  96,959  96,442  95,070   96,104     92,855     96,387  

The number of employees includes only employees of fully consolidated subsidiaries.

The increase in the number of employees between December 31, 2011 and December 31, 2010 is mainly explained by the acquisition of SunPower, partially compensated by the sale of the photocure and coatings resins businesses (see Note 3 to the Consolidated Financial Statements).

27)STATEMENT OF CASH FLOWS

 

(a)A)Number of employees and personnel expenses of fully consolidated subsidiaries.CASH FLOW FROM OPERATING ACTIVITIES

27) STATEMENT OF CASH FLOW

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€)		  2008 2007 2006   2011 2010 2009 

Interests paid

  (958) (1,680) (1,648)   (679)   (470)   (678) 

Interests received

  505  1,277  1,261    277    132    148  

Income tax paid(a)

  (10,631) (9,687) (10,439)   (12,061)   (8,848)   (7,027) 

Dividends received

  1,590  1,109  899    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€)		  2008 2007 2006   2011 2010 2009 

Inventories

  4,020  (2,706) (500)   (1,845)   (1,896)   (4,217) 

Accounts receivable

  3,222  (2,963) 494    (1,287)   (2,712)   (344) 

Other current assets

  (982) (1,341) (1,425)   (2,409)   911    1,505  

Accounts payable

  (3,056) 4,508  141    2,646    2,482    571  

Other creditors and accrued liabilities

  (633) 1,026  849    1,156    719    (831) 

Net amount

  2,571  (1,476) (441)   (1,739)   (496)   (3,316) 

 

B) Cash flow used in financing activities

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€)		 2008 2007 2006   2011 2010 2009 

Issuance of non-current debt

 5,513  3,313  3,857    4,234    3,995    6,309  

Repayment of non-current debt

 (2,504) (93) (135)   (165)   (206)   (787) 

Net amount

 3,009  3,220  3,722    4,069    3,789    5,522  

C) Cash and cash equivalents

C)Cash and cash equivalents

Cash and cash equivalents are detailed as follows:

 

For the year ended December 31,
(M€)		 2008 2007 2006  2011   2010   2009 

Cash

 1,836 1,930 1,823   4,715     4,679     2,448  

Cash equivalents

 10,485 4,058 670   9,310     9,810     9,214  

Total

 12,321 5,988 2,493   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.


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:

 

As of December 31, 2008

(M€)

Assets/(Liabilities)

  Financial instruments related to financing and trading activities  Other financial
instruments		 Total Fair value 
  Amortized
cost		 

Fair value

   
    Available
for sale		  Held for
trading		 Financial
debt(a)		 Hedging of
financial debt		 Net investment
hedge and other		    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

  2,005          2,005  2,005   2,246           2,246    2,246  

Other investments

   1,165        1,165  1,165    3,674          3,674    3,674  

Hedging instruments of non-current financial debt

       892     892  892       1,971    5      1,976    1,976  

Other non-current assets

  1,403          1,403  1,403   2,055           2,055    2,055  

Accounts receivable, net

     —        15,287  15,287  15,287          20,049    20,049    20,049  

Other operating receivables

     1,664      4,544  6,208  6,208     1,074        6,393    7,467    7,467  

Current financial assets

  1    86   100  —     187  187   146     159     383    12    —     700    700  

Cash and cash equivalents

        12,321  12,321  12,321   14,025    14,025    14,025  

Total financial assets

  3,409  1,165  1,750  992  —    32,152  39,468  39,468   4,447    3,674    1,233    —    2,354    17    —    40,467    52,192    52,192  

Total non-financial assets

           78,842    111,857   

Total assets

           118,310    164,049   

Non-current financial debt

  (414)    (15,337) (440)    (16,191) (16,191)  (4,858)     (17,551)   (97)   (49)    (2)   (22,557)   (23,247) 

Accounts payable

     —        (14,815) (14,815) (14,815)         (22,086)   (22,086)   (22,086) 

Other operating liabilities

     (1,033)     (3,264) (4,297) (4,297)    (606)       (4,835)   (5,441)   (5,441) 

Current borrowings

  (5,721)    (2,001)     (7,722) (7,722)  (6,158)     (3,517)       (9,675)   (9,675) 

Other current financial liabilities

     (146) (12)    (158) (158)  (87)   (40)   (14)   (26)   (167)   (167) 

Total financial liabilities

  (6,135)   (1,179) (17,338) (452)   (18,079) (43,183) (43,183)  (11,016)   —    (693)   (21,068)   (137)   (63)   (26)   (26,923)   (59,926)   (60,616) 

Total non-financial liabilities

           (75,127)   (104,123)  

Total liabilities

           (118,310)   (164,049)  

 

(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 MiiiM(iii) to the Consolidated Financial Statements).

As of December 31, 2007

(M€)

Assets/(Liabilities)

  Financial instruments related to financing and trading activities  Other financial
instruments		 Total Fair value 
  Amortized
cost		 

Fair value

   
    Available
for sale		  Held for
trading		 Financial
debt(a)		 Hedging of
financial debt		 Net investment
hedge and other		    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

  2,575          2,575  2,575   2,383           2,383    2,383  

Other investments

   1,291        1,291  1,291    4,590          4,590    4,590  

Hedging instruments of non-current financial debt

       460     460  460       1,814    56      1,870    1,870  

Other non-current assets

  851          851  851   1,596           1,596    1,596  

Accounts receivable, net

     464      18,665  19,129  19,129          18,159    18,159    18,159  

Other operating receivables

     519      3,911  4,430  4,430     499        3,908    4,407    4,407  

Current financial assets

  850    12   388  14   1,264  1,264   869     38     292     6     1,205    1,205  

Cash and cash equivalents

        5,988  5,988  5,988   14,489    14,489    14,489  

Total financial assets

  4,276  1,291  995  848  14  28,564  35,988  35,988   4,848    4,590    537    —    2,106    56    6    36,556    48,699    48,699  

Total non-financial assets

           77,553    95,019   

Total assets

           113,541    143,718   

Non-current financial debt

  (532)    (13,975) (369)    (14,876) (14,876)  (3,186)     (17,419)   (178)      (20,783)   (21,172) 

Accounts payable

     (243)     (17,940) (18,183) (18,183)         (18,450)   (18,450)   (18,450) 

Other operating liabilities

     (490)     (3,410) (3,900) (3,900)    (559)       (3,015)   (3,574)   (3,574) 

Current borrowings

  (2,655)    (1,958)     (4,613) (4,613)  (5,916)     (3,737)       (9,653)   (9,653) 

Other current financial liabilities

     (59) (1)    (60) (60)  (147)   (12)   —    (159)   (159) 

Total financial liabilities

  (3,187)   (792) (15,933) (370)   (21,350) (41,632) (41,632)  (9,102)   (706)   (21,156)   (190)   —    —    (21,465)   (52,619)   (53,008) 

Total non-financial liabilities

           (71,909)   (91,099)  

Total liabilities

           (113,541)   (143,718)  

 

(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 MiiiM(iii) to the Consolidated Financial Statements).

As of December 31, 2006

(M€)

Assets/(Liabilities)

  Financial instruments related to financing and trading activities  Other financial
instruments		 Total Fair value 
  Amortized
cost		 Fair value   
    Available
for sale		  Held for
trading		 Financial
debt(a)		 Hedging of
financial debt		 Net investment
hedge and other		    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

  1,533          1,533  1,533   2,367           2,367    2,367  

Other investments

   1,250        1,250  1,250    1,162          1,162    1,162  

Hedging instruments of non-current financial debt

       486     486  486       889    136      1,025    1,025  

Other non-current assets

  1,025          1,025  1,025   1,284           1,284    1,284  

Accounts receivable, net

     341      17,052  17,393  17,393          15,719    15,719    15,719  

Other operating receivables

     311      3,956  4,267  4,267     1,029        4,116    5,145    5,145  

Current financial assets

  3,496    71   341     3,908  3,908   55     53     197     6     311    311  

Cash and cash equivalents

        2,493  2,493  2,493   11,662    11,662    11,662  

Total financial assets

  6,054  1,250  723  827    23,501  32,355  32,355   3,706    1,162    1,082    —    1,086    136    6    31,497    38,675    38,675  

Total non-financial assets

           72,868    89,078   

Total assets

           105,223    127,753   

Non-current financial debt

  (581)    (13,400) (193)    (14,174) (14,171)  (2,089)     (17,107)   (241)      (19,437)   (19,905) 

Accounts payable

     (426)     (14,654) (15,080) (15,080)         (15,383)   (15,383)   (15,383) 

Other operating liabilities

     (203)     (4,060) (4,263) (4,263)    (923)       (3,783)   (4,706)   (4,706) 

Current borrowings

  (3,538)    (2,320)     (5,858) (5,858)  (4,849)     (2,145)       (6,994)   (6,994) 

Other current financial liabilities

     (75)    (75) (75)  (25)   (97)   (1)   (123)   (123) 

Total financial liabilities

  (4,119)   (704) (15,720) (193)   (18,714) (39,450) (39,447)  (6,938)   (948)   (19,252)   (338)   —    (1)   (19,166)   (46,643)   (47,111) 

Total non-financial liabilities

           (65,773)   (81,110)  

Total liabilities

           (105,223)   (127,753)  

 

(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 MiiiM(iii) to the Consolidated Financial Statements).

29)FAIR VALUE OF FINANCIAL INSTRUMENTS (EXCLUDING COMMODITY CONTRACTS)

A) IMPACT ON THE STATEMENT OF INCOME PER NATURE OF FINANCIAL INSTRUMENTS

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€)

  2008 2007 2006   2011 2010 2009 

Assets available for sale (investments):

        

— dividend income on non-consolidated companies

  238  218  237 

— dividend income on non-consolidated subsidiaries

   330    255    210  

— gains (losses) on disposal of assets

  15  170  428    103    60    6  

— others

  (15) (63) (46)

— other

   (29)   (17)   (18) 

Loans and receivables

  100  (2) 88    (34)   90    41  

Impact on net operating income

  338  323  707    370    388    239  

The impact in the statement of income mainly includes:

 

Dividends and gains or losses on disposal of other investments classified as “Assets available for sale”“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€)

  2008  2007  2006 

Loans and receivables

  547  1,135  976 

Financing liabilities and associated hedging instruments

  (996) (1,721) (1,597)

Fair value hedge (ineffective portion)

  (4) (26) 25 

Assets and liabilities held for trading

  (74) 73  232 

Impact on the cost of net debt

  (527) (539) (364)

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 beyond three months) classified as “Loans and receivables”;

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 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) IMPACT OF THE HEDGING STRATEGIES

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€)

  2008 2007 2006   2011 2010 2009 

Revaluation at market value of bonds

  (66) 137  (221)   (301)   (1,164)   (183) 

Swap hedging of bonds

  62  (163) 246    318    1,168    216  

Ineffective portion of the fair value hedge

  (4) (26) 25    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.


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, 

2008

  29  95  —    124 

2007

  (188) 217  —    29 

2006

  (183) (5) —    (188)

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  

TheAs of December 31, 2011, the fair value of the open instruments is equalamounts to zero as of December 31, 2008€(26) million compared to 14 M€6 million in 2007.2010 and€

There was no open instrument as of December 31, 2006.


5 million in 2009.

Cash flow hedge

TheseThe impact on the statement of income and on equity of the hedging instruments qualified as cash flow hedges are not significant considering the Group’s policy not to hedge future cash flowsis detailed as follows:

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, 2008, 20072011, 2010 and 2006.2009, the ineffective portion of these financial instruments is equal to zero.

C) MATURITY OF DERIVATIVE INSTRUMENTS

C)MATURITY OF DERIVATIVE INSTRUMENTS

The maturity of the notional amounts of derivativesderivative instruments, excluding the commodity contracts, is detailed in the following table:

 

As of December 31, 2008 (M€)       Notional value(a)
Assets/(Liabilities)  

Fair

value

   Total  2009  2010  2011  2012  2013  2014
and
after

Fair value hedge

                

Issue swaps and swaps hedging bonds
(liabilities)

  440   9,309            

Issue swaps and swaps hedging bonds
(assets)

  (892)  4,195                  

Total issue swaps and swaps hedging bonds
(assets and liabilities)

  (452)  13,504     2,048  3,373  3,233  3,032  1,818

Currency swaps hedging of bank and other loans

                         

Issue swaps and swaps hedging bonds
(current portion) (liabilities)

  100   1,871            

Issue swaps and swaps hedging bonds
(current portion) (assets)

  (12)  92                  

Total issue swaps and swaps hedging bonds
(current portion) (assets and liabilities)

  88   1,963  1,963               

Net investment hedge

                

Currency swaps and forward exchange contracts
(assets)

  —     1,347  1,347               

Cash flow hedge

                

Other interest rate swaps (assets)

  —     2,853            

Other interest rate swaps (liabilities)

  (4)  5,712                  

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                  

Currency swaps and forward exchange contracts (assets and liabilities)

  (56)  7,625  6,595  483  114  67  76  290

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)These amounts set the levels of notional commitment and are not indicative of a contingent gain or loss.

As of December 31, 2007(M€)      Notional value(a)
Assets/(Liabilities)  Fair
value		  Total  2008  2009  2010  2011  2012  2013
and
after

Fair value hedge

               

Issue swaps and swaps hedging bonds (liabilities)

  (369) 7,506            

Issue swaps and swaps hedging bonds
(assets)

  460  3,982                  

Total issue swaps and swaps hedging bonds
(assets and liabilities)

  91  11,488     1,910  1,836  2,725  2,437  2,580

Currency swaps hedging of bank and other loans

                        

Issue swaps and swaps hedging bonds
(current portion) (liabilities)

  (1) 306            

Issue swaps and swaps hedging bonds
(current portion) (assets)

  388  1,265                  

Total issue swaps and swaps hedging bonds
(current portion) (assets and liabilities)

  387  1,571  1,571               

Net investment hedge

               

Currency swaps and forward exchange contracts (assets)

  14  695  695               

Cash flow hedge

               

Other interest rate swaps (assets)

  1  8,249            

Other interest rate swaps (liabilities)

  —    3,815                  

Other interest rate swaps (assets and liabilities)

  1  12,064  12,058     4        2

Currency swaps and forward exchange contracts (assets)

  11  2,594            

Currency swaps and forward exchange contracts (liabilities)

  (59) 3,687                  

Currency swaps and forward exchange contracts (assets and liabilities)

  (48) 6,281  6,207  42  2  6  8  16

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  

 

(a)These amounts set the levels of notional commitment and are not indicative of a contingent gain or loss.

As of December 31, 2006 (M€)      Notional value(a)
ASSETS/(LIABILITIES)  Fair
value		  Total  2007  2008  2009  2010  2011  2012 and
after

Fair value hedge

               

Issue swaps and swaps hedging bonds
(liabilities)

  (193) 5,691            

Issue swaps and swaps hedging bonds
(assets)

  486  5,317                  

Total issue swaps and swaps hedging bonds (assets and liabilities)

  293  11,008     1,756  2,018  1,870  2,740  2,624

Currency swaps hedging of bank and other loans

                        

Issue swaps and swaps hedging bonds
(current portion) (liabilities)

   475            

Issue swaps and swaps hedging bonds
(current portion) (assets)

  341  1,341                  

Total issue swaps and swaps hedging bonds (current portion) (assets and liabilities)

  341  1,816  1,816               

Net investment hedge

               

N/A

                        

Cash flow hedge

               

Other interest rate swaps (assets)

  12  6,488            

Other interest rate swaps (liabilities)

  (8) 9,580                  

Other interest rate swaps (assets and liabilities)

  4  16,068  16,062        4     2

Currency swaps and forward exchange contracts (assets)

  59  5,003            

Currency swaps and forward exchange contracts (liabilities)

  (67) 6,065                  

Currency swaps and forward exchange contracts (assets and liabilities)

  (8) 11,068  10,513  287  201  45  22   

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  

 

(a)These amounts set the levels of notional commitment and are not indicative of a contingent gain or loss.

D)FAIR VALUE HIERARCHY

The fair value hierarchy for financial instruments excluding commodity contracts is as follows:

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  

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

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, 2008(M€)                 
ASSETS/(LIABILITIES)  Notional
value -
purchase(a)		  Notional
value -
sale(a)		  Carrying
amount		  Fair
value(e)		 

Crude oil, petroleum products and freight rates activities

       

Petroleum products and crude oil swaps(a)

  9,977  10,530  141  141 

Freight rate swaps(a)

  5  29  8  8 

Forwards(b)

  4,398  3,429  (120) (120)

Options(c)

  6,132  6,174  —    —   

Futures(d)

  1,132  3,053  17  17 

Options on futures(c)

  435  422  (7) (7)

Total crude oil, petroleum products and freight rates

        39  39 

Gas & Power activities

       

Swaps(a)

  3,180  2,983  (48) (48)

Forwards(b)

  12,541  10,483  659  659 

Options(c)

  13  9  —    —   

Futures(d)

  632  498  (19) (19)

Total Gas & Power

        592  592 

Total

        631  631 

Total of fair value non recognized in the balance sheet

           —   

As of December 31, 2007(M€)      
ASSETS/(LIABILITIES)  Notional
value -
purchase(a)		  Notional
value -
sale(a)		  Carrying
amount		 Fair
value(e)		 
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(a)

  9,048  9,671  (149) (149)   3    3  

Freight rate swaps(a)

  69  93  (3) (3)   —    —  

Forwards(b)

  7,060  7,233  (4) (4)

Options(c)

  4,852  4,143  272  272 

Forwards(a)

   (16)   (16) 

Options

   (4)   (4) 

Futures(d)

  1,734  3,510  (97) (97)   (14)   (14) 

Options on futures(c)

  365  280  (1) (1)   (6)   (6) 

Total crude oil, petroleum products and freight rates

        18  18    (37)   (37) 

Gas & Power activities

          

Swaps(a)

  1,496  1,670  4  4    57    57  

Forwards(b)

  9,558  8,306  213  213 

Options(c)

  3  10  —    —   

Forwards(a)

   452    452  

Options

   (3)   (3) 

Futures(d)

  115  94  15  15    —    —  

Total Gas & Power

        232  232    506    506  

Total

        250  250    469    469  

Total of fair value non recognized in the balance sheet

         —   

Total of fair value non-recognized in the balance sheet

    —  

 

(a)Swaps (including “Contracts for differences”): the “Notional value” columns correspond to receive-fixed and pay-fixed swaps.
(b)Forwards: contracts resulting in physical delivery are accounted for as derivative commodity contracts and included in the amounts shown.
(c)(b)Options: the “Notional value” columns correspond to the nominal value of options (calls or puts) purchased and sold, valued based on the strike price.
(d)Futures: the “Notional value” columns correspond to the net purchasing/selling positions, valued based on the transaction historical price on the organized exchange market.
(e)From 2008, whenWhen 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, 2006(M€)                 
ASSETS/(LIABILITIES)  Notional
value -
purchase(a)		  Notional
value -
sale(a)		  Carrying
amount		  Fair
value(e)		 

Crude oil, petroleum products and freight rates activities

       

Petroleum products and crude oil swaps(a)

  7,987  9,303  (30) (30)

Freight rate swaps(a)

  56  86  2  2 

Forwards(b)

  5,145  5,830  (11) (11)

Options(c)

  6,046  4,835  66  66 

Futures(d)

  1,274  2,434  79  79 

Options on futures(c)

  143  165  (4) (4)

Total crude oil, petroleum products and freight rates

        102  102 

Gas & Power activities

       

Swaps(a)

  1,161  872  (38) (38)

Forwards(b)

  9,973  9,441  (73) (73)

Options(c)

  18  58  1  1 

Futures(d)

  92  46  31  31 

Total Gas & Power

        (79) (79)

Total

        23  23 

Total of fair value non recognized in the balance sheet

           —   

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

    —  

 

(a)Swaps (including “Contracts for differences”): the “Notional value” columns correspond to receive-fixed and pay-fixed swaps.
(b)Forwards: contracts resulting in physical delivery are accounted for as derivative commodity contracts and included in the amounts shown.
(c)(b)Options: the “Notional value” columns correspond to the nominal value of options (calls or puts) purchased and sold, valued based on the strike price.
(d)Futures: the “Notional value” columns correspond to the net purchasing/selling positions, valued based on the transaction historical price on the organized exchange market.
(e)From 2008, whenWhen 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 in the balance sheet, this fair value is set to zero.

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)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 face ofmargin call received or paid in 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.

The changes in fair value of financial instruments related to commodity contracts are detailed as follows:

 

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

 

2008

  18  1,734  (1,715) 2  39 

2007

  102  1,381  (1,460) (5) 18 

2006

  28  1,577  (1,496) (7) 102 

Gas & Power activities

       

2008

  232  787  (310) (117) 592 

2007

  (79) 489  (163) (15) 232 

2006

  110  557  (744) (2) (79)
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:

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) MARKETFINANCIAL RISKS MANAGEMENT

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 its day-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 activities,business, the Group follows a policy of not selling its future oil and gas production for future delivery.production. However, in connection with thesethis trading activities,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 electricity.coal. The Group also uses freight rate derivative contracts in its shipping activitiesbusiness 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 organizedorganised markets or over-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 a value-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 a 24-hour period. The calculation of the range of potential changes in fair values takes into account a

snapshot of the end-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 the Group’s portfolio result is likely to exceed the value-at-risk loss measure once over 40 business days if the portfolio exposures were left unchanged.

Trading & Shipping:Shipping : value-at-risk with a 97.5% probability

 

As of December 31,(M€) High Low Average 

Year
end

2008

 13.5 2.8 6.9 11.8

2007

 11.6 3.3 6.7 5.4

2006

 12.9 4.3 8.6 11.4
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 powercoal trading activity, the Group also uses derivative instruments such as futures, forwards, swaps and options in both organizedorganised and

over-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 activitiesbusiness using a value-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 a one dayone-day period. The calculation of the range of potential changes in fair values takes into account a

snapshot of the end-of-day exposures and the set of historical price movements for the past two years for all instruments and maturities in the global trading activities.business.

Gas & Power trading:trading : value-at-risk with a 97.5% probability

 

As of December 31,(M€)  High  Low  Average  

Year
end

2008

  16.3  1.3  5.0  1.4

2007(a)

  18.2  3.2  7.9  4.3

2006(a)

  21.7  3.5  9.1  6.0

(a)These calculations are based on the set of historical price movements for the past year.
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 caps, floors 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 activitiesoperations and to interest rate and foreign exchange financial instruments


are managed according to rules set by the Group’s senior management, and thatwhich provide for regular pooling of available cash balances, open positions and management of the financial instruments by the treasury/financing department.Treasury Department. Excess cash of the Group is deposited mainly in government institutions, or deposit banks, selected in accordance with strict criteria, or is used to buy deposit certificates issued by these banks.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/financing department,Treasury Department, where they are managed by a team specialized in foreign exchange and interest rate market transactions.

The cash monitoring/management teamCash Monitoring-Management Unit within the treasury/financing departmentTreasury Department monitors limits and positions per bank on a daily basis and reports results.results of the Front Office. This teamunit also prepares marked-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.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.

Due toTo reduce the recent changesmarket values risk on its commitments, in particular for swaps set as part of bonds issuance, the financial markets, the Group has taken additional measures to reinforce its managementTreasury Department also developed a system of its exposure to counterparty risk. The Group takes into account the banks’ financial situation, share price and Credit Default Swap (CDS) rate when selectingmargin 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).

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 systematically 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 maximuman 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.


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, 2008, 20072011, 2010 and 2006.2009.

 

            Change in fair value due to a
change in interest rate by		 
ASSETS/(LIABILITIES)  Carrying
amount		  Estimated
fair value		  + 10 basis points  - 10 basis points 

As of December 31, 2008(M€)

             

Bonds (non-current portion, before swaps)

  (14,119) (14,119) 47  (43)

Issue swaps and swaps hedging bonds (liabilities)

  (440) (440)  

Issue swaps and swaps hedging bonds (assets)

  892  892   

Total issue swaps and swaps hedging 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) —    —   
              
As of December 31, 2007 (M€)                 

Bonds (non-current portion, before swaps)

  (11,741) (11,741) 37  (37)

Issue swaps and swaps hedging bonds (liabilities)

  (369) (369)  

Issue swaps and swaps hedging bonds (assets)

  460  460   

Total issue swaps and swaps hedging bonds (assets and liabilities)

  91  91  (39) 38 
Current portion of non-current debt after swap (excluding capital lease obligations)  (1,669) (1,669) (1) 1 

Other interest rates swaps

  1  1  —    —   

Currency swaps and forward exchange contracts

  (34) (34) —    —   
              
As of December 31, 2006 (M€)                 

Bonds (non-current portion, before swaps)

  (11,413) (11,413) 26  (26)

Issue swaps and swaps hedging bonds (liabilities)

  (193) (193)  

Issue swaps and swaps hedging bonds (assets)

  486  486   

Total issue swaps and swaps hedging bonds (assets and liabilities)

  293  293  (26) 26 
Current portion of non-current debt after swap (excluding capital lease obligations)  (2,140) (2,140) 1  (1)

Other interest rates swaps

  4  4  (1) 1 

Currency swaps and forward exchange contracts

  (8) (8) 1  (1)
            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 raterates on the cost of net debt before tax is as follows:

 

For the year ended December 31,(M€)  2008  2007  2006 

Cost of net debt

  (527) (539) (364)

Interest rate translation of + 10 basis points

  (11) (12) (12)

Interest rate translation of - 10 basis points

  11  12  12 

Interest rate translation of + 100 basis points

  (113) (116) (118)

Interest rate translation of - 100 basis points

  113  116  118 

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 accounting currency is the dollar and, to a lesser extent, the pound sterling, the Norwegian krone and the Norwegian krone.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 evolutionfluctuation of dollar and pound sterling and is set forth in the table below:


 

    Euro / Dollar
exchange rates		  Euro / Pound sterling
exchange rates

As of December 31, 2008

  1.39  0.95

As of December 31, 2007

  1.47  0.73

As of December 31, 2006

  1.32  0.67
    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, 2008(M€)  Total Euro  Dollar Pound
sterling		 Other
currencies
and equity
affiliates		 
As of December 31, 2011 (M€)  Total Euro   Dollar Pound
sterling		 Other currencies and
equity affiliates(a)		 

Shareholders’ equity at historical exchange rate

  53,868  25,084  15,429  5,587  7,768    69,025    41,396     21,728    4,713    1,188  

Currency translation adjustment before net investment hedge

  (4,876) —    (2,191) (1,769) (916)   (962)     127    (923)   (166) 

Net investment hedge — open instruments

  —    —    —    —    —      (26)     (25)   (1)   —  

Shareholders’ equity at exchange rate as of December 31, 2008

  48,992  25,084  13,238  3,818  6,852 

Shareholders’ equity at exchange rate as of December 31, 2011

   68,037    41,396     21,830    3,789    1,022  
        
As of December 31, 2007(M€)  Total Euro  Dollar Pound
sterling		 Other
currencies
and equity
affiliates		 
As of December 31, 2010 (M€)  Total Euro   Dollar Pound
sterling		 Other currencies and
equity affiliates(a)		 

Shareholders’ equity at historical exchange rate

  49,254  22,214  12,954  5,477  8,609    62,909    32,894     22,242    4,997    2,776  

Currency translation adjustment before net investment hedge

  (4,410) —    (3,501) (289) (620)   (2,501)   —     (1,237)   (1,274)   10  

Net investment hedge — open instruments

  14  —    14  —    —      6    —     6    —    —  

Shareholders’ equity at exchange rate as of December 31, 2007

  44,858  22,214  9,467  5,188  7,989 

Shareholders’ equity at exchange rate as of December 31, 2010

   60,414    32,894     21,011    3,723    2,786  
       
As of December 31, 2006(M€)  Total Euro  Dollar Pound
sterling		 Other
currencies
and equity
affiliates		 
As of December 31, 2009 (M€)  Total Euro   Dollar Pound
sterling		 Other currencies and
equity affiliates		 

Shareholders’ equity at historical exchange rate

  41,704  17,253  11,166  4,940  8,345    57,621    27,717     18,671    5,201    6,032  

Currency translation adjustment before net investment hedge

  (1,383) —    (1,393) 203  (193)   (5,074)   —     (3,027)   (1,465)   (582) 

Net investment hedge — open instruments

  —    —    —    —    —      5    —     6    (1)   —  

Shareholders’ equity at exchange rate as of December 31, 2006

  40,321  17,253  9,773  5,143  8,152 

Shareholders’ equity at exchange rate as of December 31, 2009

   52,552    27,717     15,650    3,735    5,450  

 

(a)The decrease in the heading “Other currencies and equity affiliates” is mainly explained by the change in the consolidation method of Sanofi (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 fiscal years despite the considerable fluctuation of the dollar (gain of 112 M€118 million in 2008, gain2011, nil result in 2010, loss of 35 M€32 million in 2007, loss of 30 M€ in 2006)2009).

Stock market risk

Stockmarket 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 the

global economic environment, stock market trends, valuations of the sectors in which the companies operate, and the economic and financial condition of each individual company.

Liquidity risk

Liquidityrisk

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, 2008,2011, these lines of credit amounted to $8,966$10,139 million, of which $8,725$10,096 million werewas 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, 2008,2011, the aggregate amount of the principal confirmed lines of credit granted by international banks to Group companies, including TOTAL S.A., was $9,621$11,447 million, of which $9,380$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, 2008, 20072011, 2010 and 20062009 (see Note 20 to the Consolidated Financial Statements).


 

ASSETS/(LIABILITIES)

As of December 31, 2008(M€)

  Less than
one year		 Between 1 year
and 5 years		 More than
5 years		 Total 

Non-current financial debt — net of hedging instruments

   (13,206) (2,093) (15,299)
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

  (7,722)   (7,722)   (9,675)        (9,675) 

Other current financial liabilities

  (158)   (158)   (167)        (167) 

Current financial assets

  187    187    700         700  

Cash and cash equivalents

  12,321  12,321    14,025    14,025  

Net amount before financial expense

  4,628  (13,206) (2,093) (10,671)   4,883    (4,492)   (3,630)   (3,614)   (1,519)   (7,326)   (15,698) 

Financial expense

  (436) (1,021) (181) (1,638)

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

  4,192  (14,227) (2,274) (12,309)   4,418    (4,852)   (3,930)   (3,911)   (1,766)   (8,357)   (18,398) 
      
As of December 31, 2007(M€)  Less than
one year		 Between 1 year
and 5 years		 More than
5 years		 Total 

Non-current financial debt — net of hedging instruments

   (11,424) (2,992) (14,416)
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

  (4,613)   (4,613)   (9,653)        (9,653) 

Other current financial liabilities

  (60)   (60)   (159)        (159) 

Current financial assets

  1,264    1,264    1,205         1,205  

Cash and cash equivalents

  5,988  5,988    14,489    14,489  

Net amount before financial expense

  2,579  (11,424) (2,992) (11,837)   5,882    (3,355)   (3,544)   (2,218)   (3,404)   (6,392)   (13,031) 

Financial expense

  (561) (1,389) (270) (2,220)

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

  2,018  (12,813) (3,262) (14,057)   5,500    (3,750)   (3,996)   (2,635)   (3,760)   (7,665)   (16,306) 
      
As of December 31, 2006(M€)  Less than
one year		 Between 1 year
and 5 years		 More than
5 years		 Total 

Non-current financial debt — net of hedging instruments

   (10,733) (2,955) (13,688)
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

  (5,858)   (5,858)   (6,994)        (6,994) 

Other current financial liabilities

  (75)   (75)   (123)        (123) 

Current financial assets

  3,908    3,908    311         311  

Cash and cash equivalents

  2,493  2,493    11,662    11,662  

Net amount before financial expense

  468  (10,733) (2,955) (13,220)   4,856    (3,658)   (3,277)   (3,545)   (2,109)   (5,823)   (13,556) 

Financial expense

  (567) (1,302) (160) (2,029)

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

  (99) (12,035) (3,115) (15,249)   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”).

Creditrisk

The following table sets forth financial assets and liabilities related to operating activities as of December 31, 2011, 2010 and 2009 (see Note 28 to the Consolidated Financial Statements).

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 operations.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)  2008  2007  2006
As of December 31, (M€) Assets/
(Liabilities)		 2011 2010 2009 

Loans to equity affiliates
(Note 12)

  2,005  2,575  1,533  2,246    2,383    2,367  

Loans and advances(Note 14)

  1,403  851  1,025  2,055    1,596    1,284  

Hedging instruments of non-current financial debt(Note 20)

  892  460  486  1,976    1,870    1,025  

Accounts receivable(Note 16)

  15,287  19,129  17,393  20,049    18,159    15,719  

Other operating receivables (Note 16)

  6,208  4,430  4,267  7,467    4,407    5,145  

Current financial assets
(Note 20)

  187  1,264  3,908  700    1,205    311  

Cash and cash equivalents(Note 27)

  12,321  5,988  2,493  14,025    14,489    11,662  

Total

  38,303  34,697  31,105  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, 2011, the net amount received as part of these margin calls was€1,682 million (against€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

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 a case-by-case basis, based on prior history and management’s assessment of the facts and circumstances.

 

-Gas & Power

Gas & Power

The Gas & Power division deals with counterparties in the energy, industrial and financial sectors throughout the world, primarily in Europe and North America.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 authorizations.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 to requirerequiring 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

 

Downstream SegmentRefining & Marketing

-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 a case-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 formal margining agreementsmargin call contracts wherever possible.

 

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.practices (provisions may also be calculated based on statistics).

32) OTHER RISKS AND CONTINGENT LIABILITIES

32)OTHER RISKS AND CONTINGENT LIABILITIES

TOTAL is not currently aware of any exceptional event, litigation,dispute, risks or contingent liabilities that could have a material impact on the assets and liabilities, results, financial condition, assets, resultsposition or businessoperations of the Group.

Antitrust InvestigationsThe contingent commitments and contractual obligations are detailed in note 23 to the consolidated financial statement.

1) Following investigations into certain commercial practicesANTITRUST INVESTIGATIONS

The principal antitrust proceedings in which the chemicals industry in the United States, some subsidiaries of the Arkema(1) groupGroup’s companies are involved in civil liability lawsuits in the United States and Canada for violations of antitrust laws. TOTAL S.A. has been named in certain of these suits as the parent company.are described hereafter.


F-81

Chemicals

 

(1)•

Arkema is used in this section to designate those companiesAs part of the spin-off of Arkema group whose ultimate parent company is Arkema S.A. Arkema became an independent company after being spun-off from(1) in 2006, TOTAL S.A. in May 2006.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.

In Europe, the European Commission commenced investigations in 2000, 2003 and 2004 into alleged anti-competitive practices involving certain products sold by Arkema. In January 2005, under one of these investigations, the European Commission fined Arkema 13.5 M€ and jointly fined Arkema and Elf Aquitaine 45 M€. Arkema and Elf Aquitaine have appealed these decisions to the Court of First Instance of the European Union.

The Commission notified Arkema, TOTAL S.A. and Elf Aquitaine of complaints concerning two other product lines in January and August 2005, respectively. Arkema has cooperated with the authorities in these procedures and investigations. In May 2006, the European Commission fined Arkema 78.7 M€ and 219.1 M€, as a result of, respectively, each of these two proceedings. Elf Aquitaine was held jointly and severally liable for, respectively, 65.1 M€ and 181.35 M€ of these fines while TOTAL S.A. was held jointly and severally liable, respectively, for 42 M€ and 140.4 M€. TOTAL S.A., Arkema and Elf Aquitaine have appealed these decisions to the Court of First Instance of the European Union.

Arkema and Elf Aquitaine received a statement of objections from the European Commission in August 2007 concerning alleged anti-competitive practices related to another line of chemical products. As a result, Arkema and Elf Aquitaine have been jointly and severally fined in an amount of 22.7 M€ and individually in an amount of 20.43 M€ for Arkema and 15.89 M€ for Elf Aquitaine. The companies concerned appealed this decision to the relevant European court.

No facts have been alleged that would implicate TOTAL S.A. or Elf Aquitaine in the practices questioned in these proceedings, and the fines received are based solely on their status as parent companies.

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, as well as TOTAL S.A. and Elf Aquitaine.

2) As part of the agreement relating to the spin-off of Arkema, TOTAL S.A. or certain other Group companies agreed to grant Arkema guarantees for certain risks related to antitrust proceedings arising from events prior to the spin-off.

These guarantees cover,This guarantee covers, for a period of ten years that began in 2006,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 covering the risks related to anti-competition violations in Europe applies to amounts above a 176.5 M€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.

On

In the other hand, the agreements provide that Arkema will indemnifyUnited States, civil liability lawsuits, for which TOTAL S.A. or any Group company for 10% of any amount that TOTAL S.A. or any Grouphas been named as the parent company, are required to pay under any ofclosed without significant impact on the proceedings covered by these guarantees.Group’s financial position.

3) The Group has recorded provisions amounting to 85 M€ in its consolidated financial statements as of December 31, 2008 to cover the risks mentioned above.

4) Moreover, as a result of investigations started byIn Europe, since 2006, the European Commission in October 2002 concerning certain Refining & Marketing subsidiarieshas fined companies of the Group Total Nederland N.V. andin its configuration prior to the spin-off an overall amount of€385.47 million, of which Elf Aquitaine and/or TOTAL S.A. receivedwere 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 statementresult, since the spin-off, the Group has paid the overall amount of objections in October 2004. These proceedings€188.07 million(2), 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 September 2006, in Total Nederland N.V. being fined 20.25 M€ and in TOTAL S.A. as its parent company being held jointly responsible for 13.5 M€ of this amount, although no facts implicating TOTAL S.A. in the practices under investigation were alleged. TOTAL S.A. and Total Nederland N.V. have appealed this decision to the Court of First Instance of the European Union.

In addition, in May 2007, Total France and TOTAL S.A. received a statement of objections regarding alleged antitrust practices concerning another product line of the Refining & Marketing division. These proceedings resulted, in October 2008, in Total France being fined 128.2 M€ and in TOTAL S.A., as its parent company, being held jointly responsible although no facts implicating TOTAL S.A. in the practices under investigation were alleged. TOTAL S.A. and Total


Raffinage & Marketing (the new corporate name of Total France) have appealed this decision to the Court of First Instance of the European Union.

5) Given the discretionary powers granted toprosecutions from the European Commission for determining fines relating to antitrust regulations, it is not currently possible to determine with certaintywhich Elf Aquitaine has been named as the outcomeparent company, and two of these investigations and proceedings. 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.

F-90

(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.

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 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 methodfinancial impacts of determining these fines. Althoughproceedings 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 predictexclude the ultimate outcomepossibility 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.

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 they willtheir 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 consignations and its financial condition or results.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

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 iswas operated by Hertfordshire Oil Storage Limited (HOSL), a company in which the BritishTOTAL’s UK subsidiary of TOTAL 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. At this stage, responsibility for the explosion has not yet been determined. The civil procedure for claims, which havehad 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 court is expectedtook place in January 2010. The Court of Appeals, by a decision handed down on March 4, 2010, confirmed the first quarter 2009.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, andparties. The provision for the civil liability that appears in the Group’s consolidated financial statements as of December 31, 2011, stands at€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.

OnIn 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, the British subsidiary was fined £3.6 million and paid it. The decision takes into account a number of TOTAL. An initial court hearing is expected inelements that have mitigated the second quarter 2009.

VENEZUELA

On February 26, 2007 the Venezuelan president signed a decree providing for the transformationimpact of the Strategic Associations fromcharges brought against it.

ERIKA

Following the Faja region (including Sincor), into mixed companies with the government having a minimum interest of 60%. The legislation further stated

that operations were to be transferred to PDVSA no later than May 1, 2007, and that the private companies were to have a four-month period to reach an agreement on the terms and conditions of their interestsinking in the mixed companies.

Within this framework, TOTAL signed two agreements with PDVSA and Statoil, with the approvalDecember 1999 of the ministry in charge of energy and oil:

On April 25, 2007, an agreement accordingErika, a tanker that was transporting products belonging to which the control of Sincor operations was transferred temporarily, from May 1, 2007, to PDVSA;

On June 26, 2007, heads of agreement providing for the transformationone of the Sincor association into a mixed company. Pursuant to these headsGroup companies, theTribunal de grande instance of agreement, TOTAL’s share in the project decreased from 47% to 30.323%, PDVSA’s interest increased from 38% to 60% and Statoil’s interest decreased from 15% to 9.677%. This agreement also provides for compensation to be awarded toParis convicted TOTAL with the amount to be negotiated based on the valueS.A. of the assets.

The conditions of this transformation were approved by the National Assembly in October 2007. Presidential decrees regarding the creation of the mixed company, PetroCedeño and the transfer of the rights to conduct the principal activities were published in the Venezuelan official gazette on November 9, 2007 and January 10, 2008, respectively. The finalization of the transformation process occurred on February 8, 2008.

In the Group’s financial statements, PetroCedeño (formerly Sincor) was consolidated by the equity method as of December 31, 2007 at 30.323%; special items related to this transformation into a mixed company were booked as of the first quarter 2008.

KAZAKHSTAN

On January 14, 2008, members of NCSPSA (North Caspian Sea Production Sharing Agreement) and the Kazakh authorities signed a Memorandum of Understanding to end the dispute among them that began at the end of August 2007. The final agreements, which are necessary to the implementation of this Memorandum of Understanding and of the additional protocol signed on June 25, 2008, were signed on October 31, 2008. An update of the costs and schedule of the first development phase has been proposed to and accepted by the authorities.

According to these protocols and agreements:

A decrease in the foreign partners’ interest in favor of KMG (KazMunaiGas) decreases TOTAL’s share in this permit from 18.52% to 16.81%; and


The financial terms are modified in favor of the Republic of Kazakhstan by (i) the implementation of a priority payment representing a percentage of the sales depending on crude oil prices, (ii) an increase in the production bonus, and (iii) a decrease in the interest rate on recoverable investments depending on crude oil prices.

SINKING OF THE ERIKA

Pursuantmarine pollution pursuant to a judgment issued on January 16, 2008, theTribunal de grande instance of Paris foundfinding that TOTAL S.A. was negligent in its vetting procedure for vessel selection.selection, and ordering TOTAL S.A. was finedto pay a fine of€375,000. The courtCourt also ordered compensation to be paid to those affected by the victims of pollution from the Erika up to an aggregate amount of 192 M€,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 believes that the finding of negligence and the related conviction for marine pollution are without substance as a matter of fact and as a matter of law. TOTAL also considers that this verdict is contrary to the intended aim of enhancing maritime transport safety.

TOTAL has appealed the verdict of January 16, 2008. In the meantime, it has nevertheless proposed to pay third parties who so requestrequested definitive compensation as determined by the court. As of today, thirty-sixCourt. Forty-two third parties have received compensation payments, representingbeen compensated for an aggregate amount of 170.1 M€.171.5 million.

The hearing of the appeal beforeBy a decision dated March 30, 2010, the Court of AppealsAppeal of Paris is expectedupheld the lower Court verdict pursuant to beginwhich 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.

To facilitate the payment of damages awarded by the Court of Appeal in October 2009.

AtParis to third parties against Erika’s controlling and classification firm, the current stageship-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 a reasonable estimate of its liability,the information currently available, the case willshould not have a materialsignificant 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 exploration 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 the 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 Russian Olympic Committee, the Group considers this claim to be 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 other actions and measures 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 an out-of-court settlement as it is often the case in this kind of proceeding.

Late in 2011, the SEC and the DoJ proposed to 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 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. Resolving these cases is not expected to have a significant impact on the Group’s financial situation or consequences 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

33) OTHER INFORMATIONAs 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.

A) RESEARCH AND DEVELOPMENT COSTS33)OTHER INFORMATION

Research and development costs incurred by the Group in 20082011 amounted to 612 M€ (594 M776 million (€715 million in 20072010 and 569 M€650 million in 2006)2009), corresponding to 0.3%0.4% of the sales.

The staff dedicated in 20082011 to these research and development activities are estimated at 4,2853,946 people (4,216(4,087 in 20072010 and 4,0914,016 in 2006)2009).

 

34)CHANGES IN PROGRESS IN THE GROUP STRUCTURE

B) TAXES PAID TO MIDDLE EAST OIL-PRODUCING COUNTRIES FOR THE PORTION WHICH TOTAL HELD HISTORICALLY AS CONCESSIONS

Taxes paidsigned in March 2011 agreements for the portion thatacquisition 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 held historically as concessions (Abu Dhabi offshorewould become an equal partner with Tullow and onshore, Dubai offshore, OmanCNOOC in the blocks, each with a one-third interest and Abu Al Bu Khoosh) included in operating expenses amounted to 3,301 M€ in 2008 (2,505 M€ in 2007 and 2,906 M€ in 2006).

C) CARBON DIOXIDE EMISSION RIGHTS

The principles governingeach being an operator of one of the accounting for emission rights are presented in Note 1 paragraph Tblocks. Subject to the Consolidated Financial Statements.decision of the Authorities, TOTAL would be the operator of Block 1.

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.

As of December 31, 2010, the sections “Assets classified as held for sale” and “Liabilities directly associated with the assets classified as held for sale” included the assets and liabilities of Total E&P Cameroun, of Joslyn and of photocure and coatings resins businesses.

35)CONSOLIDATION SCOPE

As of December 31, 2008,2011, 870 entities are consolidated of which 783 are fully consolidated, and 87 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 sites’ position for emission rightsinterest is balancedmentioned between delivered or acquired emission rights and emissions for the year 2008.

34) SPIN-OFF OF ARKEMA (2006)

The spin-offbrackets. This chart of Arkema that took place in 2006 led to the distribution of Arkema shares to TOTAL shareholders (other than TOTAL S.A). This operation can be analyzed as an exchange of non-monetary assets for TOTAL S.A. shareholders.

As IFRS do not contain specific rules for this type of transaction, the accounting treatment for the spin-off in TOTAL’s Consolidated Financial Statements has been based on Generally Accepted Accounting Principles in the United States (U.S. GAAP), and more particularly on opinion APB 29 (Accounting Principles Board Opinions) “Accounting for Non-monetary Transactions”.

All assets and liabilities which were spun-off have been derecognized on the basis of their net book value, with a corresponding decrease of consolidated shareholders’ equity and no impact on the Group’s Consolidated Statement of Income.

The spin-off of Arkema was approved by the shareholders’ meeting held on May 12, 2006. Since Arkema’s results for the period between April 1, 2006 and May 12, 2006, were not material, the deconsolidation has been completed on the basis of Arkema book values as of March 31, 2006, also taking into account the capital increase that took place in April 2006.

In accordance with IFRS 5 “Non-current assets held for sale and discontinued operations”, the contribution of Arkema entities has been reported as discontinued operations since Arkema can be clearly distinguished and has been spun off in a single and coordinated plan.


Financial information related to Arkema’s contribution to the Consolidated Financial Statements is presented below. This contributive informationlegal detentions is not directly comparable toexhaustive and does not reflect neither the combined and pro-forma accounts filed by Arkema foroperational structure nor the purposerelative economic size of the public listing of its shares, asGroup entities and the latter have been based on specific conventions mainly related to the consolidation scope, accounting options and indicators.business segments.

Tax losses of Arkema entities, as they occurred, have been used in the consolidated tax return of the Group.

 

Statement of income

As of December 31,(M€)

2006

Revenues from sales

1,497

Purchases and other operating expenses

(1,377)

Depreciation of tangible assets

(53)

Operating income

67

Equity in income (loss) of affiliates, others

(42)

Taxes

(30)

Net income

(5)

Balance sheet

As of December 31,(M€)

2006(1)

Non-current assets

1,995

Working capital

1,501

Provisions and other non-current liabilities

(1,090)

Capital employed

2,406

Net debt

(144)

Shareholders’ equity

2,262

(1)Detailed assets and liabilities which have been spun-off as of May 12, 2006.

Statement of cash flow

For the year ended December 31,(M€)

2006

Cash flow from operating activities

53

Cash flow used in investing activities

(76)

Cash flow from financing activities

(109)

Net increase/decrease in cash and cash equivalents

(132)

Effect of exchange rates and changes in consolidation scope

113

Cash and cash equivalents at the beginning of the period

84

Cash and cash equivalent at the end of the period

65

Earnings per share and fully-diluted earnings per share are presented below for continuing and discontinued operations.

Earnings per share

For the year ended December 31,(€)

2006

Earnings per share of continuing operations

5.13

Earnings per share of discontinued operations

0.00

Earnings per share

5.13

Diluted earnings per share

For the year ended December 31,(€)

2006

Diluted earnings per share of continuing operations

5.09

Diluted earnings per share of discontinued operations

0.00

Diluted earnings per share

5.09

35) CONSOLIDATION SCOPE

LOGOLOGO

TOTAL

SUPPLEMENTAL OIL AND GAS INFORMATION (Unaudited)

As from 2009, the amendments to the Securities and Exchange Commission (SEC) Rule 4-10 of Regulation 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-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, of non-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.

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 Technical 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 Technical Reserves Committee is appointed by the Senior Management of Exploration & Production and its members represent expertise in reservoir engineering, production geology, production geophysics, drilling, and 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

evaluation and classification; and to conduct periodically in-depth technical review of reserves for each affiliate.

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 Reserves Vice-President (RVP) is the technical person responsible for preparing the reserves estimates for the Group. Appointed by the President of Exploration & Production, the RVP supervises the Reserve Entity, chairs the annual review of reserves, and is a member of the Technical Reserves Committee and the SEC Reserves Committee. The RVP has over thirty 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 fifteen years of experience in the field of reserves evaluation and control process. He holds an engineering degree from Institut National des Sciences Appliquées, Lyon, France, and a petroleum engineering degree from Ecole Nationale Supérieure du Pétrole et des Moteurs (IFP School), France. He is a past member and past chairman of the Society of 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 the end of 2009, proved developed reserves of oil and gas were 5,835 Mboe and represented 56% of the proved reserves. Over the past three years, the level of proved developed reserves has remained above 5.7 Bboe and over 53% of proved reserves, illustrating TOTAL’s ability to consistently transfer proved undeveloped reserves into developed status.

Proved undeveloped reserves

As of December 31, 2011, TOTAL’s combined proved undeveloped reserves of oil and gas were 5,377 Mboe as compared to 4,987 Mboe at the end of 2010. The net increase of 390 Mboe of proved undeveloped reserves is due to the addition of +639 Mboe of undeveloped reserves related to extensions and discoveries, a net increase of +401 Mboe due to acquisitions/divestitures, the revision of -168 Mboe of previous estimates (partly resulting from negative price effects), and the transfer of 482 Mboe from proved undeveloped reserves to proved developed reserves. In 2011, the costs incurred to develop proved undeveloped reserves (PUDs) was€10.2 billion, which represents 84% of 2011 development costs incurred, and was related to projects located for the most part in Angola, Australia, Canada, Kazakhstan, Nigeria, Norway, United Kingdom and Russia.

Approximately 57% of the Group’s proved undeveloped reserves are associated with producing projects and are

located for the most part in Angola, Canada, Nigeria, Norway, and 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 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 production start-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 PUD’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 Statementthe FASB’s ASC 932 and the requirements of Financial Accounting Standards No. 69 (FAS No. 69, “Disclosures About Oilthe SEC Regulation S-K (Items 1200 to 1208).

The tables provided below are presented by the following geographic areas: Europe, Africa, the Americas, Middle East and Gas Producing Activities”)Asia (including CIS).

Oil and gas reservesESTIMATED PROVED RESERVES OF OIL, BITUMEN AND GAS RESERVES

The following tables present, for crude oil, condensatesbitumen and natural gas liquids reserves and for natural gas reserves, an estimate of the Group’s oil, bitumen and gas quantities by geographicalgeographic areas as of December 31, 2008, 20072011, 2010 and 2006.

2009. Quantities shown concern proved developed and undeveloped reserves together with changes in quantities for 2008, 20072011, 2010 and 2006.2009.

The definitions used for proved, proved developed and proved undeveloped oil and gas reserves, proved developed oil and gas reserves and proved undeveloped reserves are in accordance with the applicable United States Securities & Exchange Commission (SEC) regulation,revised Rule 4-10 of SEC Regulation S-X. Proved

All references in the following tables to reserves or production are estimated using geological and engineering data to determine with reasonable certainty whether the crude oilGroup’s entire share of such reserves or natural gas in known reservoirs is recoverable under existing economic and operating conditions. This process involves making subjective judgments. Consequently,

estimates of reserves are not exact measurements and are subject to revision. The reserve estimates shown below do not include quantities that may or may not be produced, due to changes in economic conditions or pursuant to new technologies. For additional information onproduction. TOTAL’s reserves estimation process, see “Item 4. Information on the Company — Exploration & Production — Reserves”.

The percentage of proved developed reserves has remained relatively stable over the past three years, indicating thatworldwide proved reserves are consistently moved from undeveloped to developed status. Over time, undeveloped reserves will be reclassified toinclude the developed category as new wells are drilled, existing wells are recompleted and/or facilities to produce from existing and future wells are installed. Major development projects typically take two to four years from the time of recording proved reserves to the start of production from these reserves.


Estimated proved reserves of its consolidated subsidiaries as well as its proportionate share of the proved reserves of equity affiliates.

Changes in oil, bitumen and gas reserves

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  

Changes in oil reserves

The oil reserves for the years prior to 2009 include crude oil, and natural gas liquids (condensates, LPG) and bitumen reserves. Bitumen reserves as from 2009 are shown separately.

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  

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 

(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 affiliates.

There are no minority interests for bitumen reserves.

Changes in gas reserves

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  

RESULTS OF OPERATIONS FOR OIL AND GAS PRODUCING ACTIVITIES

The following tables reflect the estimated proved reserves of crudedo not include revenues and expenses related to oil and natural gas as of December 31, 2006, 2007transportation activities and 2008,LNG liquefaction and the changes therein.transportation activities.

 

    Crude Oil, Condensate and Natural Gas Liquids (Mb) 
    Europe  Africa  

North

America

  Asia-
Pacific		  

Rest of

World(a)

  Total  

Equity

Affiliates

and Non-

Consolidated

 

Balance as of January 1, 2006

  978  2,463  231  62  1,848  5,582  1,010 

Revisions of previous estimates

  40  146  1  6  65  258  4 

Extensions, discoveries and other

  13  113  —    —    —    126  60 

Acquisitions of reserves in place

  —    —    22  —    —    22  3 

Sales of reserves in place

  (6) —    (2) —    (21) (29) (16)

Production for the year

  (132) (220) (2) (11) (78) (443) (106)

Balance as of December 31, 2006

  893  2,502  250  57  1,814  5,516  955 

Revisions of previous estimates

  108  149  (4) (1) (550) (298) 525 

Extensions, discoveries and other

  4  90  2  6  1  103  7 

Acquisitions of reserves in place

  —    —    —    —    —    —    —   

Sales of reserves in place

  (3) (2) (6) —    (459) (470) (9)

Production for the year

  (122) (241) (5) (10) (77) (455) (96)

Balance as of December 31, 2007

  880  2,498  237  52  729  4,396  1,382 

Revisions of previous estimates

  15  297  (32) 21  112  413  21 

Extensions, discoveries and other

  12  107  —    3  —    122  3 

Acquisitions of reserves in place

  2  —    —    —    —    2  6 

Sales of reserves in place

  —    (74) —    —    (43) (117) —   

Production for the year

  (111) (231) (4) (10) (50) (406) (127)

Balance as of December 31, 2008

  798  2,597  201  66  748  4,410  1,285 

Minority interests in proved developed and undeveloped reserves as of (Mb):

 

December 31, 2006

  17  82  —    —    —    99  

December 31, 2007

  15  116  —    —    —    131  

December 31, 2008

  12  89  —    —    —    101  

Proved developed and undeveloped reserves of equity and non-consolidated affiliates as of (Mb):

 

December 31, 2006

  —    56  —    —    899   955 

December 31, 2007

  —   ��43  —    —    1,339   1,382 

December 31, 2008

  —    58  —    —    1,227   1,285 

Proved developed reserves as of (Mb):

 

December 31, 2006

  629  1,436  19  40  418  2,542  665 

December 31, 2007

  560  1,389  25  33  253  2,260  735 

December 31, 2008

  516  1,313  10  34  278  2,151  651 

Proved developed reserves of equity and non-consolidated affiliates as of (Mb):

 

December 31, 2006

  —    49  —    —    616   665 

December 31, 2007

  —    30  —    —    705   735 

December 31, 2008

  —    44  —    —    607   651 
   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)Including the Middle East.Included production taxes and accretion expense as provided for by IAS 37 (€271 million in 2009,€326 million in 2010 and€338 million in 2011).

    Natural Gas (Bcf) 
    Europe  Africa  

North

America

  Asia-
Pacific		  

Rest of

World(a)

  Total  

Equity

Affiliates

and Non-

Consolidated

 

Balance as of January 1st, 2006

  5,790  4,798  224  4,057  5,401  20,270  4,480 

Revisions of previous estimates

  127  133  (8) 116  (106) 262  (9)

Extensions, discoveries and other

  283  32  —    —    —    315  2,105 

Acquisitions of reserves in place

  —    —    12  —    —    12  1 

Sales of reserves in place

  (31) —    (160) —    (1) (192) —   

Production for the year

  (717) (176) (16) (470) (222) (1,601) (104)

Balance as of December 31, 2006

  5,452  4,787  52  3,703  5,072  19,066  6,473 

Revisions of previous estimates

  487  805  2  (61) (95) 1,138  155 

Extensions, discoveries and other

  265  12  3  263  —    543  126 

Acquisitions of reserves in place

  —    —    —    —    —    —    —   

Sales of reserves in place

  —    (1) —    —    —    (1) (4)

Production for the year

  (673) (232) (12) (470) (276) (1,663) (103)

Balance as of December 31, 2007

  5,531  5,371  45  3,435  4,701  19,083  6,647 

Revisions of previous estimates

  145  381  (17) 415  726  1,650  (13)

Extensions, discoveries and other

  377  17  —    90  —    484  76 

Acquisitions of reserves in place

  76  —    —    —    —    76  —   

Sales of reserves in place

  —    —    —    —    (15) (15) —   

Production for the year

  (622) (240) (6) (453) (340) (1,661) (109)

Balance as of December 31, 2008

  5,507  5,529  22  3,487  5,072  19,617  6,601 

Minority interests in proved developed and undeveloped reserves as of (Bcf):

 

   

December 31, 2006

  92  88  —    —    —    180  

December 31, 2007

  80  111  —    —    —    191  

December 31, 2008

  75  64  —    —    —    139  
Proved developed and undeveloped reserves of equity and non-consolidated affiliates as of (Bcf):  

December 31, 2006

  —    20  —    —    6,453   6,473 

December 31, 2007

  —    140  —    —    6,507   6,647 

December 31, 2008

  —    215  —    —    6,386   6,601 
Proved developed reserves as of (Bcf):        

December 31, 2006

  3,632  2,643  39  2,592  2,395  11,301  1,331 

December 31, 2007

  3,602  2,560  30  2,221  3,427  11,840  1,267 

December 31, 2008

  3,989  2,280  8  2,180  3,825  12,282  1,181 

Proved developed reserves of equity and non-consolidated affiliates as of (Bcf):

 

  

December 31, 2006

  —    20  —    —    1,311   1,331 

December 31, 2007

  —    14  —    —    1,253   1,267 

December 31, 2008

  —    12  —    —    1,169   1,181 

(a)Including the Middle East.
   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  

Results of operations of oil and gas producing activitiesCOST INCURRED

The following tables include revenues and expenses associated directly with the Group’s oil and gas producing activities. They do not include any interest costs.

   Consolidated subsidiaries 
(M€) Europe  Africa  North
America		  Asia-
Pacific		  Rest of
World(a)		  Total 

Year ended December 31, 2008

      

Revenues

      

Sales to unaffiliated parties

 4,521  2,930  94  2,785  2,205  12,535 

Transfers to affiliated parties

 6,310  11,425  89  403  903  19,130 

Total Revenues

 10,831  14,355  183  3,188  3,108  31,665 

Production costs

 (1,280) (1,055) (117) (210) (398) (3,060)

Exploration expenses

 (185) (209) (99) (156) (115) (764)

Depreciation, depletion and amortization and valuation allowances

 (1,266) (1,195) (239) (422) (492) (3,614)

Other expenses(b)

 (260) (1,214) (3) (34) (605) (2,116)

Pretax income from producing activities

 7,840  10,682  (275) 2,366  1,498  22,111 

Income tax

 (5,376) (7,160) 74  (1,199) (677) (14,338)

Results of oil and gas producing activities

 2,464  3,522  (201) 1,167  821  7,773 

Year ended December 31, 2007

      

Revenues

      

Sales to unaffiliated parties

 3,715  2,497  —    2,123  3,076  11,411 

Transfers to affiliated parties

 5,484  9,724  247  384  665  16,504 

Total Revenues

 9,199  12,221  247  2,507  3,741  27,915 

Production costs

 (1,102) (906) (100) (195) (385) (2,688)

Exploration expenses

 (113) (480) (49) (54) (180) (876)

Depreciation, depletion and amortization and valuation allowances

 (1,287) (932) (136) (340) (616) (3,311)

Other expenses(b)

 (244) (1,238) —    (26) (841) (2,349)

Pretax income from producing activities

 6,453  8,665  (38) 1,892  1,719  18,691 

Income tax

 (4,180) (5,772) 24  (915) (1,040) (11,883)

Results of oil and gas producing activities

 2,273  2,893  (14) 977  679  6,808 

Year ended December 31, 2006

      

Revenues

      

Sales to unaffiliated parties

 3,285  2,550  1  2,276  2,457  10,569 

Transfers to affiliated parties

 7,333  8,179  167  374  1,124  17,177 

Total Revenues

 10,618  10,729  168  2,650  3,581  27,746 

Production costs

 (910) (731) (57) (184) (307) (2,189)

Exploration expenses

 (140) (246) (40) (58) (149) (633)

Depreciation, depletion and amortization and valuation allowances

 (1,256) (844) (78) (301) (519) (2,998)

Other expenses(b)

 (227) (1,274) (3) (25) (881) (2,410)

Pretax income from producing activities

 8,085  7,634  (10) 2,082  1,725  19,516 

Income tax

 (5,115) (5,335) (14) (1,008) (803) (12,275)

Results of oil and gas producing activities

 2,970  2,299  (24) 1,074  922  7,241 

(a)Including the Middle East.
(b)Including production taxes and IAS 37 accretion expense (162 M€ in 2006, 169 M€ in 2007 and 223 M€ in 2008).

Group’s share of equity affiliates’ results of oil and gas producing activities:

December 31, 2008

 —   49 —   —   532 581

December 31, 2007

 —   95 —   —   179 274

December 31, 2006

 —   125 —   —   257 382

Costs incurred

The tables below presentset 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  Consolidated subsidiaries 
(M€)  Europe  Africa  North
America		  

Asia-

Pacific

  

Rest of

World(a)

  Total  Europe   Africa   Americas   Middle
East		   Asia   Total 

December 31, 2008

            

2009

            

Proved property acquisition

  269  78  —    —    26  373   71     45     1,551     105     —     1,772  

Unproved property acquisition

  24  143  19  3  8  197   26     8     403     —     21     458  

Exploration costs

  228  493  109  222  147  1,199   284     475     222     87     123     1,191  

Development costs(b)

  2,035  3,121  320  689  1,276  7,441

Total costs incurred

  2,556  3,835  448  914  1,457  9,210

December 31, 2007

            

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

  —    50  —    1  10  61   162     137     26     139     21     485  

Unproved property acquisition

  —    265  9  18  10  302   5     124     1,186     8     619     1,942  

Exploration costs

  230  586  49  158  172  1,195   361     407     276     17     250     1,311  

Development costs(b)

  1,762  2,853  429  622  1,159  6,825

Total costs incurred

  1,992  3,754  487  799  1,351  8,383

December 31, 2006

            

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

  58  3  125  —    53  239   298     10     413     2     251     974  

Unproved property acquisition

  —    20  31  240  11  302   1     397     1,692     3     14     2,107  

Exploration costs

  229  538  112  69  204  1,152   505     384     239     17     417     1,562  

Development costs(b)

  1,284  2,272  403  544  1,251  5,754

Total costs incurred

  1,571  2,833  671  853  1,519  7,447

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)Including the Middle East.
(b)Including asset retirement costs capitalized during the year and any gains or losses recognized upon settlement of asset retirement obligationsobligation during the year.

Group’s share of equity affiliates’ costs of property acquisition, exploration and development:

December 31, 2008(a)

  —    360  —    —    612  972

December 31, 2007(a)

  —    48  —    —    599  647

December 31, 2006(a)

  —    71  —    —    716  787

(a)Including 33 M€ of exploration costs in 2008, 58 M€ in 2007 and 56 M€ in 2006.

Costs to develop Proved Undeveloped Reserves

The following table presents the amounts spent to develop the proved undeveloped reserves in 2006, 2007 and 2008, as well as the amounts included in the most recent standardized measure of future net cash flows to develop proved undeveloped reserves in each of the next three years.

(M€)  2006  2007  2008  2009  2010  2011 

Costs to develop Proved Undeveloped
Reserves (consolidated subsidiaries)

  5,128  6,035  6,636  7,702(a) 7,721(a) 6,417(a)

(a)Estimates.

Capitalized costsCAPITALIZED COSTS RELATED TO OIL AND GAS PRODUCING ACTIVITIES

Capitalized costs represent the amounts of capitalized proved and unproved property costs, including support equipment and facilities, along with the related accumulated depreciation, depletion and amortization.

The following tables present details ofdo not include capitalized costs related to the Group’s oil and gas explorationtransportation and production activities as of the datesLNG liquefaction and on the basis indicated.transportation activities.

 

  Consolidated subsidiaries   Consolidated subsidiaries 
(M€)  Europe Africa 

North

America

 

Asia-
Pacific

 

Rest of

World(a)

 Total   Europe Africa Americas Middle
East		 Asia Total 

December 31, 2008

       
As of December 31, 2009       

Proved properties

  26,030  25,136  2,400  4,857  10,911  69,334    30,613    27,557    7,123    5,148    10,102    80,543  

Unproved properties

  132  1,145  131  377  131  1,916    337    1,138    839    30    555    2,899  

Total capitalized costs

  26,162  26,281  2,531  5,234  11,042  71,250    30,950    28,695    7,962    5,178    10,657    83,442  

Accumulated depreciation

  (18,382) (12,339) (660) (2,265) (5,144) (38,790)

Accumulated depreciation, depletion and amortization

   (21,870)   (13,510)   (2,214)   (3,325)   (3,085)   (44,004) 

Net capitalized costs

  7,780  13,942  1,871  2,969  5,898  32,460    9,080    15,185    5,748    1,853    7,572    39,438  

Company’s share of equity affiliates’ net capitalized costs

  —    403  —    —    2,452  2,855 

December 31, 2007

       

As of December 31, 2010

       

Proved properties

  29,263  20,035  2,112  3,891  9,246  64,547    31,735    32,494    7,588    5,715    12,750    90,282  

Unproved properties

  215  993  104  305  151  1,768    402    1,458    2,142    49    1,433    5,484  

Total capitalized costs

  29,478  21,028  2,216  4,196  9,397  66,315    32,137    33,952    9,730    5,764    14,183    95,766  

Accumulated depreciation

  (21,092) (10,484) (432) (1,737) (4,380) (38,125)

Accumulated depreciation, depletion and amortization

   (23,006)   (16,716)   (2,302)   (3,849)   (4,092)   (49,965) 

Net capitalized costs

  8,386  10,544  1,784  2,459  5,017  28,190    9,131    17,236    7,428    1,915    10,091    45,801  

Company’s share of equity affiliates’ net capitalized costs

  —    233  —    —    1,477  1,710 

December 31, 2006

       

As of December 31, 2011

       

Proved properties

  28,217  19,569  1,884  3,678  9,861  63,209    34,308    37,032    8,812    6,229    17,079    103,460  

Unproved properties

  89  807  193  243  181  1,513    460    1,962    4,179    62    911    7,574  

Total capitalized costs

  28,306  20,376  2,077  3,921  10,042  64,722    34,768    38,994    12,991    6,291    17,990    111,034  

Accumulated depreciation

  (20,456) (11,271) (553) (1,588) (4,604) (38,472)

Accumulated depreciation, depletion and amortization

   (24,047)   (18,642)   (2,294)   (4,274)   (5,066)   (54,323) 

Net capitalized costs

  7,850  9,105  1,524  2,333  5,438  26,250    10,721    20,352    10,697    2,017    12,924    56,711  

Company’s share of equity affiliates’ net capitalized costs

  —    321  —    —    1,331  1,652 

 

(a)Including the Middle East.
   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 flowsSTANDARDIZED MEASURE OF

DISCOUNTED FUTURE NET CASH FLOWS

(EXCLUDING TRANSPORTATION)

The standardized measure of discounted future net cash flows from production ofrelating to proved reservesoil and gas reserve quantities was developed as follows:

 

1.Estimates of proved reserves and the corresponding production profiles are based on technical and economic conditions at year end;

estimates of proved reserves and the corresponding production profiles are based on existing technical and economic conditions;

 

2.The estimated future cash flows from proved reserves are determined based on prices at December 31, with future price changes considered only to the extent provided by contractual arrangements in existence at year end;

the estimated future cash flows are determined based on prices used in estimating the Group’s proved oil and gas reserves;

 

3.The future cash flows incorporate estimated production costs (including production taxes), future development costs and asset retirement costs. All

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;

estimates are based on year-end technical and economic conditions;

 

4.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 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

 

5.Future net cash flows are discounted at a standard discount rate of 10%.

future net cash flows are discounted at a standard discount rate of 10%.

These principles applied are those required by FAS No. 69ASC 932 and do not necessarily reflect the expectations of real revenues from these reserves, nor their present value; hence, they do not constitute criteria offor investment decision.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 reservereserves estimates.


  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  

The following is the projected standardized measure of discounted future net cash flows relating to proved oil and gas reserves:CHANGES IN THE STANDARDIZED MEASURE OF DISCOUNTED

FUTURE NET CASH FLOWS

 

    Consolidated subsidiaries 
(M€)  Europe  Africa  

North

America

  

Asia-
Pacific

  

Rest of

World(a)

  Total 

December 31, 2006

       

Future cash inflows

  59,051  108,847  5,915  16,061  59,065  248,939 

Future production costs

  (10,057) (19,223) (2,443) (2,136) (18,706) (52,565)

Future development costs

  (9,379) (15,929) (968) (3,866) (6,121) (36,263)

Future income taxes

  (28,069) (45,714) (459) (4,522) (12,271) (91,035)

Future net cash flows, after income taxes

  11,546  27,981  2,045  5,537  21,967  69,076 

Discount at 10%

  (4,545) (12,171) (1,092) (1,927) (14,293) (34,028)

Standardized measure of discounted future net cash flows

  7,001  15,810  953  3,610  7,674  35,048 

December 31, 2007

       

Future cash inflows

  87,540  157,199  8,585  20,268  46,282  319,874 

Future production costs

  (12,897) (23,109) (3,110) (2,379) (10,074) (51,569)

Future development costs

  (10,764) (19,012) (1,641) (4,225) (4,525) (40,167)

Future income taxes

  (43,851) (75,557) (887) (6,200) (9,284) (135,779)

Future net cash flows, after income taxes

  20,028  39,521  2,947  7,464  22,399  92,359 

Discount at 10%

  (8,070) (17,474) (1,511) (2,664) (14,176) (43,895)

Standardized measure of discounted future net cash flows

  11,958  22,047  1,436  4,800  8,223  48,464 

December 31, 2008

       

Future cash inflows

  42,749  67,761  3,487  10,444  20,824  145,265 

Future production costs

  (8,593) (15,372) (1,638) (2,003) (7,565) (35,171)

Future development costs

  (10,423) (21,594) (1,157) (3,659) (5,277) (42,110)

Future income taxes

  (15,651) (14,571) 2  (2,047) (2,444) (34,711)

Future net cash flows, after income taxes

  8,082  16,224  694  2,735  5,538  33,273 

Discount at 10%

  (3,645) (8,144) (286) (1,072) (4,140) (17,287)

Standardized measure of discounted future net cash flows

  4,437  8,080  408  1,663  1,398  15,986 
   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 

  

  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

   —     —     —     —     —     —  

 

(a)IncludingThe reported volumes are different from those shown in the Middle East.reserves table due to gas consumed in operations.

Minority interests in future net cash flows as of:
(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.

 

December 31, 2006

  255  418  —    —    —    673

December 31, 2007

  407  654  —    —    —    1,061

December 31, 2008

  217  (50) —    —    —    167

Group’s share of equity affiliates’ future net cash flows as of:S-19

December 31, 2006

  —    549  —    —    3,545  4,094

December 31, 2007

  —    526  —    —    9,552  10,078

December 31, 2008

  —    418  —    —    4,883  5,301

Changes in the standardized measure of discounted future net cash flows

The following table indicates the changes in the standardized measure of discounted future net cash flows for the periods indicated.

    For the year ended
December 31,		 
(M€)  2008  2007  2006 

Consolidated

    

Beginning of year

  48,464  35,048  49,394 

Sales and transfers, net of production costs

  (26,109) (19,095) (21,335)

Net change in sales and transfer prices, net of production costs

  (81,358) 56,678  (11,481)

Extensions, discoveries and improved recovery, net of future production and development costs

  556  2,895  1,534 

Changes in estimated future development costs

  (2,227) (6,491) (7,666)

Previously estimated development costs incurred during the year

  6,960  6,581  5,150 

Revisions of previous quantity estimates

  2,693  (6,521) (1,382)

Accretion of discount

  4,846  3,505  4,939 

Net change in income taxes

  63,611  (22,585) 16,268 

Purchases of reserves in place

  50  —    574 

Sales of reserves in place

  (1,500) (1,551) (947)

End of year

  15,986  48,464  35,048 

S-9