• | | TOTAL is a shareholder inInPhotovoltechItaly, a company specialized in manufacturing high-efficiency photovoltaic cells. The Group now holds 50% of Photovoltech’s share capital, alongside GDF Suez, pursuant to the buyout in September 2009 by both companies of the 4.4% interest held by IMEC (Interuniversity MicroElectronics Centre). In 2009, Photovoltech pursued its project to increase the overall production capacity of its Tirlemont plant (Tienen, Belgium) from 80 Mwp/y in 2009 to 155 MWp/y in late 2010. In a challenging market and given the sharp decrease in the price of cells, Photovoltech’s 2009 sales were€80 million, compared to€106 million in 2008 and€73 million in 2007.
TOTAL also plans to build an industrial photovoltaic plant in the Carling region in eastern France in partnership with GDF Suez.
TOTAL holds a 50% interest inTenesol, in partnership with EDF. Tenesol, whose headquarters are located in Lyon (France), designs, manufactures, markets and operates solar-photovoltaic power systems. Its principal markets are for network connections in France, in the French Overseas Territories and in Europe. Tenesol is also active in certain professional applications (telecommunications, oil & gas sites, etc.). Tenesol owns two solar panel manufacturing plants: Tenesol Manufacturing in South Africa, with production capacity of 60 MWp/y; and Tenesol Technologies in the Toulouse region of France, with production capacity of 50 MWp/y. In 2009, despite strong pressure on the price of modules, Tenesol’s consolidated sales increased by nearly 30% to€249 million (compared to nearly€193 million in 2008 and€133 million in 2007), representing a marketed production of 85 MWp.
Regarding R&D, TOTAL, GDF Suez and Photovoltech confirmed their cooperation with IMEC by signing an agreement in September 2009 as part of the IIAP (IMEC Industrial Affiliation Program), a multi-partner program
on crystalline silicon solar cells. The objective of the IIAP is to sharply reduce the use of silicon while increasing the efficiency of cells in order to substantially lower the cost for solar energy.
In September 2009, the Group also partnered with LPICM (Laboratoire de Physique des Interfaces et desCouches Minces), a research unit comprised of the French National Center for Scientific Research (CNRS) and France’s Ecole Polytechnique engineering school to set up a joint research team — Nano PV — in the Saclay area near Paris focusing on thin-film technologies and silicon-based nano-materials. TOTAL committed€8 million for the first 4-year phase.
In December 2008, TOTAL acquired an interest in a U.S. start-up company,Konarka, which specializes in the development of organic solar technologies. In 2009, Konarka implemented new research projects in cooperation with the Gas & Power division and other Group Chemicals subsidiaries to develop solar film on a large scale. The Group is confident in the potential of this promising technology and decided to increase its interest in Konarka to nearly 25% of the share capital in early 2010.
Total Énergie Solaire, the subsidiary created in July 2008 as partoptimization of the Group’s contribution to the “Grenelle de l’environnement”, a program launched by the French government, started operating in 2009 with the installation of solar panels at two Group’s sites in Pau and Lacq (France). A total of five educational projects are expected to be completed in late 2010 to display different photovoltaic applications at the Group’s sites, with an overall installed capacity of between 2 MWp and 3 MWp and an investment of€15 million.
Furthermore, TOTAL conducts decentralized rural electrification operations by responding to calls for tenders from authorities in several countries, notably in South Africa where KES (Kwazulu Energy Services Company), in which TOTAL holds a 35% interest, intends to equip 30,000 isolated homes. New projects are under study related to Africa, Asia and the Middle East.
In addition,Temasol, a wholly-owned subsidiary of Tenesol since the transfer in 2008 of the respective shares of Total Maroc and EDF EDEV, is involved in decentralized rural electrification projects in Morocco. Since its creation in 2001, approximately 25,500 households have been equipped and are now operated by Temasol.
Solar power storage
In November 2009, TOTAL announced the signature of a research agreement with the Massachussetts Institute of Technology (MIT) to develop new stationary batteries
that are designed to enable the storage of solar power. This $4 million agreement over five years is part of the MIT Energy Initiative, which TOTAL joined as a member in November 2008.
Wind power
TOTAL operates a 12 MW wind farm in Mardyck (near its Flanders refinery, located in Dunkirk, France).
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 launched 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 was successfully tested offshore in 2009. Construction of a full-scale prototype is scheduled for 2010.
Coal
For nearly thirty years, TOTAL has exported steam coal from South Africa, primarily to Europe and Asia. The Group also trades steam coal through its subsidiaries Total Gas & Power Ltd and Total Energy Resources (Pacific Basin). In addition, TOTAL markets coal to French customers through its subsidiary CDF Énergie.
With the start-up of production on the Tumelo mine in January 2009, the subsidiary Total Coal South Africa (TCSA) owns and operates four mines in South Africa. A fifth mine is under development in Dorstfontein with a start-up expected in late 2011. The Group is also looking into several other mining development projects.
South African coal, produced by TCSA or bought from third-party’s mines, is exported through the port of Richard’s Bay in which TOTAL has a 5.36% interest. In 2008, TOTAL 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.
TOTAL sold approximately 7.3 Mt of coal worldwide in 2009 (compared to 8.4 Mt in 2008 and 10 Mt in 2007), mainly intended for power generation, of which 3.6 Mt was South African coal. Half of this volume was sold in Europe and the other half in Asia. On the South African domestic market, sales amounted to 0.3 Mt in 2009, primarily destined for the industrial and metallurgic sectors.
DME (Di-Methyl Ether)
In Japan, TOTAL is involved with eight Japanese companies in a program intended to heighten consumer awareness regarding this new generation fuel. The 80 kt/y DME production plant, located in Niigata (Honshu Island, Japan), started up in January 2009 (TOTAL, 10%).
As part of the consortium led by Volvo, TOTAL is involved in the “bio-DME” European project, which is intended to test the whole DME chain, from its
production from black liquor, a paper pulp residue, to its use by a fleet of trucks in four Swedish cities. This project, which includes the construction of a pilot in Pitea (Sweden), started in September 2009 and is expected to end in 2012. It is partly funded by the Swedish Energy Agency and the EU Seventh Framework Program.
In addition, the international working group established as part of the ISO standardization process for DME pursued its activities in 2009. For two years as from January 1, 2009, TOTAL will also chair the IDA (International DME Association).
DOWNSTREAM
The Downstream segment comprises TOTAL’s Refining & Marketing and Trading & Shipping divisions.
Refining & Marketing
As of December 31, 2009, TOTAL’s worldwide refining capacity was 2,594 kb/d. In 2009, the Group’s worldwide refined products sales were 3,616 kb/d (including trading operations), compared to 3,658 kb/d in 2008 and 3,774 kb/d in 2007. TOTAL is the largest refiner/marketer in Western Europe(1), and the largest marketer in Africa(2). As of December 31, 2009, TOTAL’s worldwide marketing network consisted of 16,299 retail stations (compared to 16,425 in 2008 and 16,497 in 2007), more than 50% of which are owned by the Group. In addition, TOTAL’s refining operations allow the Group to produce a broad range of specialty products, such as lubricants, liquefied petroleum gas (LPG), jet fuel, special fluids, bitumen, marine fuels and petrochemical feedstock.
The Group is adapting its Refining business to an environment that is depressed due to weaker demand for refined products. TOTAL continues to improve its positions by focusing on three key areas: adapting its European refining system to market changes; modernizing its Port Arthur refinery in the United States and building a refinery in Jubail in Saudi Arabia.
Regarding its Marketing business, the Group intends to consolidate its position in Western Europe, pursue targeted developments in Africa and the growing markets of the Asia-Pacific region and expand its specialty products business worldwide.
Consistent with the optimization of its Downstreamdownstream portfolio in Europe, TOTAL signed an agreement with
ERGTotalErg (TOTAL, 49%) was created in Januaryautumn 2010 to create a joint venture in the Refining and Marketing business in Italy(3). “TotalErg” will be the name of this newly created company through the merger of Total Italia and ERG Petroli. The shareholders agreement calls forTotalErg has become the third largest operator in the Italian market with a joint governancenetwork market share of the company as well as the operating independence of the joint-venture. TOTALnearly 13%(1) and Erg will hold a 49% and a 51% interest, respectively. The transaction is subject to approval by the relevant authorities.
Refining
As of December 31, 2009, TOTAL held interests in twenty-four refineries (including twelve that it operates), located in Europe, the United States, the French West Indies, Africa and China. 2009 was marked by the deterioration of the refining environment that led to sharp declines in refining margins and decreasing utilization rates in refineries worldwide.
In 2009, TOTAL continued its program of selective investments in Refining focused on three areas: pursuing major ongoing projects (Port Arthur coker, Jubail refinery), adapting the European refining system to structural market changes, and strengthening safety and energy efficiency.
• | | InWestern Europe, TOTAL’s refining capacity was 2,282 kb/d in 2009, accounting for more than 85% of the Group’s overall refining capacity. The Group
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| operates eleven refineries in Western Europe, and
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1. | Based on publicly available information, refining and/or sales capacities and quantities sold. |
2. | PFC Energy December 2009, based on quantities sold. |
3. | Excluding Sicilia and excluding jet fuels and AS24 payment cards. |
| | holds interests in the German refinery of Schwedt and in four Spanish refineries through its holding in CEPSA(1).more than 3,350 service stations.
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| • | | InFrance,the Group continues to adapt its refining capacities and to shift the production emphasis to diesel, in a context of structural decline in demand for petroleum products in Europe and an increase in gasoline surpluses.
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TOTAL 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. At the Normandy refinery, the project will shift the production emphasis to diesel. To this end, an investment program estimated at€770 million will enable TOTAL to upgrade the refinery: the refinery’s annual distillation capacity will be reduced to 12 Mt from 16 Mt, and the distillate hydrocracker (DHC) commissioned in 2006 will be expanded. These investments are designed to improve energy efficiency and reduce carbon dioxide emissions, while increasing the annual average diesel output by 10% and reducing gasoline surpluses by 60%. Consultation with employee representatives ended in July 2009. Implementation of the project has started and is scheduled to last until 2013.
In March 2010, the Group announced a plan to repurpose its Flanders refinery site. This plan calls for shutting down refining operations at the site (capacity of 137 kb/d), developing new refining operations support and petroleum logistics activities and implementing the planned LNG terminal project in partnership with French utility EDF, for which the final investment decision is expected before summer 2010 with a view to commissioning in 2014(2). The permanent refinery shutdown will result in a gradual dismantling of units that could continue to 2013. Implementation of this project is subject to consultation with employee representative organizations. Furthermore, TOTAL pledged not to close or sell any French refinery over the next five years, with the exception of the planned repurposing of the Flanders refinery.
In December 2009, the Group signed an agreement to divest its minority interest (40%) in Société de la Raffinerie de Dunkerque (SRD), a company specialized in the production of bitumen and base oils, subject to the approval by the relevant authorities.
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: | • | | In theUnited Kingdom, construction at the Lindsey refinery started in June 2007 on a
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| | 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 the first half of 2010 and is designed to increase the portion of high-sulphur crude that the plant can process from 10% to nearly 70%.
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| • | | InGermany, a new desulphurization unit at the Leuna refinery started up in September 2009. This unit is designed to supply the German market with low-sulphur heating oil.
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| • | | In theNetherlands, TOTAL, as the majority shareholder in the Vlissingen refinery (55%), exercised its pre-emptive rights over the shares (45%) of this asset that were offered for sale by Dow Chemical in June 2009. Concurrently, TOTAL received from Lukoil a binding purchase offer for these shares (45%) and sold these shares to Lukoil, which constituted the development of a new partnership between the two companies.
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| • | | InItaly, following the agreement signed in January 2010, the TotalErg joint venture will hold a 100% interest in the Rome refinery and a 25.9% interest in the Trecate refinery.
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| • | | InSpain, CEPSA has been pursuing its investment plan to improve the conversion capacity of its refineries to meet the growing demand for middle-distillates in the Spanish market. The construction of a hydrocracker unit, two additional distillation units (one atmospheric and one vacuum) and a desulphurization unit is underway at the Huelva refinery. Commissioning is currently expected in the summer of 2010.
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• | | In theUnited States, TOTAL operates the Port Arthur refinery in Texas, with a capacity of 174 kb/d. TOTAL began a modernization program at this refinery in 2008, which includes the construction of a deep-conversion unit (or coker), a vacuum distillation unit, a desulphurization unit and other associated units to enable the refinery to process more heavy and high-sulphur crudes and to increase production of lighter products, in particular low-sulphur distillates. Construction is ongoing and commissioning is expected in the first quarter of 2011.
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• | | InSaudi Arabia, TOTAL and Saudi Arabian Oil Company (Saudi Aramco) created a joint venture in September 2008,Saudi Aramco Total Refining and Petrochemical Company (SATORP), to build a 400 kb/d refinery in Jubail held by Saudi Aramco (62.5%) and TOTAL (37.5%). Eventually, TOTAL and Saudi Aramco each plans to retain a 37.5% interest
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| | | | | | | | | | | | | (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 | |
1. | Group’s share in CEPSA: 48.83% as of December 31, 2009. |
2. | For additional information on the Dunkirk LNG project, see “Item 4. Business Overview—Gas & Power”. |
| | with the remaining 25% expected to be listed on the Saudi stock exchange in late 2011, subject to approval by the relevant authorities. Signing the main contracts for the construction of the refinery in July 2009 marked the start-up of work. Commissioning is expected in 2013.
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The heavy conversion process for this refinery is designed for the processing
(a) | Including TOTAL’s share in CEPSA (up to end of heavier crudes (Arabian Heavy)July 2011) and, for the production of fuels and lighter products that meet strict specifications, and are mainly intended for export.• | | InAfrica, TOTAL holds interests in five refineries as of December 31, 2009. In October 2009, TOTAL disposed of its 50% interest in the Indeni refinery in Zambia. In addition, TOTAL decreased its interest to 20% from 34% in Société africaine de raffinage (SAR) in Senegal in December 2009.
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• | | InChina, TOTAL has a 22.4% interest in the WEPEC refinery, located in Dalian, in partnership with Sinochem and PetroChina.
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Crude oil refining capacity
The table below sets forth TOTAL’s crude oil refining capacity(a):
| | | | | | | As of December 31, (kb/d) | | 2009 | | 2008 | | 2007 | Refineries operated by the Group | | | | | | | Normandy (France) | | 338 | | 339 | | 331 | Provence (France) | | 158 | | 158 | | 158 | Flanders (France) | | 137 | | 137 | | 141 | Donges (France) | | 230 | | 230 | | 230 | Feyzin (France) | | 117 | | 117 | | 117 | Grandpuits (France) | | 101 | | 101 | | 101 | Antwerp (Belgium) | | 350 | | 350 | | 350 | Leuna (Germany) | | 230 | | 230 | | 227 | Rome (Italy)(b) | | 64 | | 64 | | 63 | Lindsey — Immingham (United Kingdom) | | 221 | | 221 | | 221 | Vlissingen (Netherlands)(c) | | 81 | | 81 | | 81 | Port Arthur, Texas (United States) | | 174 | | 174 | | 174 | Sub-total | | 2,201 | | 2,202 | | 2,194 | Other refineries in which the Group has an interest(d) | | 393 | | 402 | | 404 | Total | | 2,594 | | 2,604 | | 2,598 |
(a) | For refineries not 100% owned by TOTAL, the capacity shown represents TOTAL’s share of the overall refining capacity of the refinery.as from October 1, 2010, in TotalErg. |
(b) | TOTAL’s interest is 71.9%. |
(c) | TOTAL’s interest is 55%. |
(d) | TOTAL has interests ranging from 16.7% to 50% in twelve refineries (five in Africa, four in Spain, one in Germany, one in Martinique and one in China). TOTAL disposed of its 50% interest in the Indeni refinery in Zambia in 2009 and of its 55.6% interest in the Luanda refinery in Angola in 2007.(1) | PFC Energy, Unione Petrolifera, based on quantities sold. |
Refined products(2) | The table below sets forth by product category TOTAL’s netMarket share of refined quantities produced at the Group’s refineries(a): | | | | | | | (kb/d) | | 2009 | | 2008 | | 2007 | Gasoline | | 407 | | 443 | | 501 | Jet fuel(b) | | 186 | | 208 | | 208 | Diesel and heating oils | | 851 | | 987 | | 964 | Heavy fuel oils | | 245 | | 257 | | 254 | Other products | | 399 | | 417 | | 412 | Total | | 2,088 | | 2,312 | | 2,339 |
(a) | Including TOTAL’s share in CEPSA. |
(b) | Avgas, jet fuel and kerosene. |
Utilization rate
The table below sets forth the utilization rate of the Group’s refineries(a):
| | | | | | | | | | | | 2009 | | | 2008 | | | 2007 | | Crude | | 78 | % | | 88 | % | | 87 | % | Crude and other feedstock | | 83 | % | | 91 | % | | 89 | % |
(a) | Including TOTAL’s share in CEPSA. |
In 2009, TOTAL had to reduce the utilization rate of its refineries to adapt to weaker demand. In particular, the Port Arthur, Lindsey and Flanders refineries as well as a distillation unit at the Normandy refinery were temporarily shut down for economic reasons.
In 2009, five refineries underwent major turnarounds.
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 10%(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, LPG, jet fuel, special fluids, bitumen and marine fuels, with products marketed in approximately 150 countries(4).
1. | Based on publicly available information, quantities sold. Portfolio: France, Benelux, United Kingdom, Germany, Italy and, through CEPSA, Spain and Portugal. |
2. | PFC Energy December 2009, where the Group operates, based on quantities sold. |
3. | Based on 2011 publicly available information, quantities sold. |
4. | Including through national distributors. |
Europe
In Europe, as of December 31, 2009, TOTAL has a network of 10,825 service
Service stations in France, Belgium, the Netherlands, Luxembourg, Germany, the United Kingdom, Italy, and, through its interest in CEPSA, Spain and Portugal. TOTAL also has a network of more than 540 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-eight European countries. InFrance, the TOTAL-branded network benefits from a large number of service stations and a diverse selection of products (such as theBonjour convenience stores and car washes). Elf-branded service stations offer quality fuels at prices that are particularly competitive. As of December 31, 2009, nearly 2,300 TOTAL-branded service stations and 281 Elf-branded service stations were operating in France. TOTAL also markets fuels at nearly 1,800 Elan-branded service stations, generally located in rural areas.
InWestern Europe, TOTAL continued in 2009 its efforts to optimize its Marketing business.
The table below sets forth the number of service stations of the Group: • | | InItaly, the agreement signed between TOTAL and ERG in January 2010 to create the TotalErg joint venture will enable the Group to become the third marketing operator in Italy with a retail market share of nearly 13%(1) and more than 3,400 service stations.
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• | | InFrance,TOTAL announced in January 2010 a restructuring plan of its petroleum product logistics operations. This plan calls for outsourcing the operations of five depots to specialized logistics companies, closing the Pontet depot and doubling the capacity of the Port-la-Nouvelle depot. Implementation of this project is subject to consultation with employee representative organizations.
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TOTAL signed in July 2009 an agreement to acquire thirty-seven service stations. In October 2009, the Group also signed an agreement to dispose of thirty-four service stations located in Corsica. These transactions have been approved by the relevant authorities. In January 2010, TOTAL also finalized the disposal of half of its share (50%) in Société des Dépôts Pétroliers de Corse.
In July 2009, the Group inaugurated a logistic platform in Rouen designed to supply Europe and
other continents with lubricants and grease. This investment is intended to improve the competitiveness of the Lubricants business line.
• | | InPortugal, since TOTAL and CEPSA merged their oil marketing businesses in 2008, TOTAL has had a leading position in the country with a market share of nearly 11%(2), a network of 300 service stations and a strengthened position in the specialty products market.
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InNorthern, Central and Eastern Europe, the Group is developing its positions primarily in the specialty products market. In 2009, TOTAL continued to expand its 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 and Ukraine through the development of its direct presence in these markets since 2008.
AS24, which is present in twenty-two European countries and in Russia, continued to expand its network in 2009 by opening new marketing outlets in Europe, in particular in three new countries (Croatia, Bulgaria, Republic of Macedonia). During the next few years, the AS24 network is expected to continue to grow and expand to other countries in Europe, the Caucasus and the Mediterranean Basin.
Africa & the Middle East
As of December 31, 2009, TOTAL is the leading marketer of petroleum products in the African continent, with a market share of nearly 10%(3), over 3,600 service stations in more than forty countries and 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 active mainly in the specialty products market and is pursuing its growth strategy in the region, notably through the production and marketing of lubricants.
In 2009, the Group continued to strengthen its positions on the African continent. In the second quarter of 2009, TOTAL completed the acquisition of marketing and logistics assets in Kenya and Uganda. The transaction covers 165 service stations, aviation products distribution as well as several logistics sites and a lubricant manufacturing plant.
Asia-Pacific
As of December 31, 2009, TOTAL was present in nearly twenty countries in the Asia-Pacific region, primarily in the specialty products market. The Group is developing
| | | | | | | | | | | | | 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 | |
1. | PFC Energy, Unione Petrolifera, based on quantities sold. |
2. | Based on publicly available information, quantities sold. |
3. | PFC Energy December 2009, based on quantities sold. |
its position as a fuel marketer in the region, in particular in China,
(a) | Total-, Elf- and operates networks in Pakistan, the Philippines and Cambodia. TOTAL is also a significant player in the Pacific Islands. In addition, five service stations opened in Indonesia in 2009.InChina, the Group has approximately 110 service stations as of December 31, 2009, following two joint venture agreements signed in 2005 by TOTAL and Sinochem to develop a network of 500 service stations in the Beijing and Shanghai areas.
InVietnam, TOTAL continues to strengthen its position in the specialty products market. After the acquisition of an LPG marketing company in December 2008, the Group finalized in December 2009 the acquisition of lubricants assets, making TOTAL one of the leaders of the Vietnamese lubricants market.
The Americas
InLatin Americaand theCaribbean, TOTAL is active in nearly twenty countries, primarily in the specialty products market. In the Caribbean, the Group holds a significant position in the fuel distribution business that was strengthened by the acquisition in the second half of 2008 of marketing and logistics assets in Puerto Rico, Jamaica and the Virgin Islands.
InNorth America, TOTAL markets lubricants and is continuing to grow with the signature in December 2009 of an agreement to acquire lubricant assets in the province of Quebec in Canada.
Sales of refined products
The table below sets forth TOTAL’s volumes of refined petroleum products sold by geographic area(a):
| | | | | | | | (kb/d) | | 2009 | | 2008 | | 2007 | | France | | 808 | | 822 | | 846 | | Europe excluding France(a) | | 1,245 | | 1,301 | | 1,432 | | United States | | 118 | | 147 | | 162 | (b) | Africa | | 281 | | 279 | | 286 | | Rest of world | | 189 | | 171 | | 167 | | Total excluding Trading | | 2,641 | | 2,720 | | 2,893 | (b) | Trading | | 975 | | 938 | | 881 | | Total including trading | | 3,616 | | 3,658 | | 3,774 | (b) |
(a) | Including TOTAL’s share in CEPSA. |
(b) | The amount is different from that in TOTAL’s 2007 Form 20-F due to a change in the calculation method for sales of the Port Arthur refinery. |
Service stations
The table below sets forth the number of service stations in TOTAL’s network by geographic area(a):
| | | | | | | | As of December 31, | | 2009 | | | 2008 | | 2007 | France | | 4,606 | (b) | | 4,782 | | 4,992 | Europe excluding France and CEPSA | | 4,485 | | | 4,541 | | 4,762 | CEPSA(c) | | 1,734 | | | 1,811 | | 1,680 | Africa | | 3,647 | | | 3,500 | | 3,549 | Rest of world | | 1,827 | | | 1,791 | | 1,514 | Total | | 16,299 | | | 16,425 | | 16,497 |
(a) | Excluding AS24-branded service stations. |
(b) | Of which nearly 2,300 TOTAL-branded service stations, nearly 281 Elf-branded service stations and more than 1,800 Elan-branded service stations. |
(c) | Including all service stations within the CEPSA network. |
Biofuels
TOTAL is present in the biodiesel and biogasoline biofuel sectors. In 2009, TOTAL produced and blended 560 kt of ethanol(1) in gasoline at twelve European refineries(2)(compared to 425 kt in 2008 and 350 kt in 2007) and 1,870 kt of VOME(3) in diesel at fifteen European refineries(4) and several oil depots (compared to 1,470 kt in 2008 and 880 kt in 2007).
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, the Group announced in 2009 that it would participate in the BioTfueL research project intended to develop a technology to transform biomass into biodiesel.
In April 2009, the Group announced that it had acquired an interest in Gevo, a U.S. company developing a portfolio of bioproducts intended for the transportation fuel and chemicals markets. Gevo is developing an innovative technology to convert sugars derived from biomass into higher alcohols and hydrocarbons.
The Group is also involved in 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 lignocellulosic biomass.
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: 1. | Including ethanol from ETBE (Ethyl-Tertio-Buthyl-Ether). |
2. | Including the AlgecirasBioTfueL, which aims to develop technology to convert biomass into biodiesel; and Huelva refineries (CEPSA). |
3. | VOME: Vegetable-Oil-Methyl-Ester. |
4. | Including the Algeciras, Huelva and Tarragona refineries (CEPSA). |
Hydrogen and electric mobility
For several years, TOTAL has been involved in research and testing programs for fuel cell and hydrogen fuel technologies. The Group 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.
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. In 2009, as part of the Clean Energy Partnership project, TOTAL built a new prototype hydrogen fueling station in Germany. Three other service stations of the Group are marketing hydrogen in Germany and Belgium.
In Germany, the Group is also involved in a demonstration project for marketing electricity at four TOTAL-branded service stations in Berlin, in partnership with the utility company Vattenfall.
Trading & Shipping The 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 its scope of operations 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 and Marketing Canada L.P. and Chartering & Shipping Services S.A.
Trading
TOTALspot price in the future is one ofhigher than the world’s largest 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 %) | | 2009 | | 2008 | | 2007 | Sales of crude oil | | 3,679 | | 3,839 | | 4,194 | Sales to Group Refining & Marketing division(a) | | 1,771 | | 1,995 | | 2,042 | Share of sales to external customers | | 1,908 | | 1,844 | | 2,152 | Sales to external customers/total sales | | 52% | | 48% | | 51% | Supply of crude oil | | 3,679 | | 3,839 | | 4,194 | Share of production sold(b)(c) | | 1,310 | | 1,365 | | 1,502 | Purchased from external suppliers | | 2,370 | | 2,474 | | 2,692 | Production sold/total supply | | 36% | | 36% | | 36% |
(a) | Excluding share of CEPSA.reverse situation is described as backwardation. |
(b) | Including condensates and natural gas liquids.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. |
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. |
(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. 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. |
(b) | Ethylene, propylene and butadiene. |
(c) | Including TOTAL’S proportionate share of joint ventures production. |
The Trading division operates extensively on physical and derivatives markets, both organized and over the counter. In connection with its trading business, 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 operations are subject to strict internal controls and trading limits.
Throughout 2009, the Trading division maintained a level of activity similar to the levels attained in 2008 and 2007, trading physical volumes of crude oil and refined products amounting to an average of approximately 5 Mb/d.
In 2009, the main market benchmarks were characterized by a strong contango(1):
| | | | | | | | | | | | | | | | | | | | | | | 2009 | | 2008 | | 2007 | | min 2009 | | | max 2009 | | Brent ICE — 1st Line(a) | | ($/b) | | 62.73 | | 98.52 | | 72.67 | | 39.6 | | (Feb. 11 | ) | | 79.7 | | (Oct. 14 | ) | Brent ICE — 12th Line(b) | | ($/b) | | 70.43 | | 102.19 | | 73.24 | | 48.3 | | (Feb. 11 | ) | | 86.4 | | (Nov. 24 | ) | Contango time structure (12th-1st) | | ($/b) | | 7.70 | | 3.59 | | 0.57 | | 3.8 | | (Aug. 07 | ) | | 15.2 | | (Jan. 02 | ) | Gasoil ICE — 1st Line(c) | | ($/t) | | 522.20 | | 920.65 | | 637.84 | | 361.3 | | (Feb. 24 | ) | | 653.8 | | (Oct. 15 | ) | VLCC Ras Tanura Chiba — BITR(c) | | ($/t) | | 10.43 | | 24.09 | | 13.93 | | 6.3 | | (May 05 | ) | | 17.9 | | (Jan. 08 | ) |
(a) | 1st line: Quotation for ICE Futures for delivery during the month M+1.
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(b) | 12thLine: Quotation for ICE Futures for delivery during the month M+12.
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(c) | VLCC: Very Large Crude Carrier. BITR: Baltic International Tanker Routes. |
Highlights of 2009 included a significant oversupply of crude oil and petroleum products compared to demand. Demand recovered slightly in the second half of the year.
The oversupply led to increased inventory levels. This trend was exacerbated by the steepening of the contango structure for future oil prices. In early 2009, the contango reached its maximum for the year (15.2 $/b) and then decreased but remained high enough to finance oil storage in onshore tanks and, once saturated, in offshore oil tankers (floating storage).
Shipping
The Group’s Shipping division arranges the transportation of crude oil and refined products necessary for the Group’s activities. The Shipping division provides a wide range of shipping services required by the Group to develop its activities 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 2009, the Shipping division chartered approximately 3,000 voyages to transport approximately 123 Mt. At year-end 2009, the Group employed a fleet of fifty-five vessels chartered under long-term or medium-term
agreements (including four LPG carriers and no single-hulled vessels). The fleet has an average age of approximately four years.
In 2009, the oil freight market was adversely affected by the combination of two factors:
A strong increase of more than 10% in the tonnage of the global supply of tankers of over 10,000 deadweight tons, mainly due to the delivery of numerous new vessels in every segment and few disposals of vessels.
A decline in demand for transport due to the 1.6% decrease in the average demand for oil in 2009. This global decrease, primarily due to the worldwide recession, led to a reduction in OPEC’s production in late 2008. As a result, crude transport dropped, especially on long-haul VLCC routes from the Persian Gulf.
Freight rates decreased throughout 2009 and, starting in the second quarter, reached levels that barely covered the vessels’ operating costs. Within a few months, the market turned from historically high levels in 2008 to record low levels in 2009. The weak freight rates and pricing structure for the crude oil market followed by the petroleum products market led to using vessels as floating storage.
CHEMICALS
The Chemicals segment includes the Base Chemicals and Specialty Chemicals divisions:
Base Chemicals encompasses the Group’s petrochemicals and fertilizers businesses; and
Specialty Chemicals encompasses the Group’s rubber processing, resins, adhesives and electroplating businesses.
1. | Contango is defined as a market situation in which the price of a good in the future is higher than its prompt price in the spot market. |
Base Chemicals
The Base Chemicals division includes TOTAL’s petrochemical and fertilizer businesses.
In 2009, Base Chemicals sales were€8.66 billion, compared to€13.18 billion in 2008 and€12.56 billion in 2007. The 2009 market environment for the Base Chemicals division was marked by a decreasing
demand for petrochemical products in Europe and the United States and a decline in margins of products from steam crackers. The Group’s operations in Qatar and Korea helped to offset the challenging environment in mature areas. The Fertilizers business was affected by decreasing volumes and very weak margins throughout the year.
Petrochemicals
TOTAL’S PRODUCTION CAPACITIES BY
MAIN PRODUCT GROUPS AND REGIONS
| | | | | | | | | | | | | | | 2009 | | 2008 | | 2007 | (kt) | | Europe | | North America | | Asia and Middle East(c) | | Worldwide | | Worldwide | | Worldwide | Olefins(a) | | 4,695 | | 1,195 | | 1,005 | | 6,895 | | 7,285 | | 7,175 | Aromatics | | 2,500 | | 940 | | 755 | | 4,195 | | 4,360 | | 4,335 | Polyethylene | | 1,320 | | 440 | | 280 | | 2,040 | | 2,035 | | 2,035 | Polypropylene | | 1,335 | | 1,150 | | 295 | | 2,780 | | 2,750 | | 2,575 | Styrenics(b) | | 1,110 | | 1,350 | | 630 | | 3,090 | | 3,220 | | 3,160 |
(a) | Ethylene, propylene and butadiene. |
(b) | Styrene and polystyrene. |
(c) | Including minority interests in Qatar and 50% of Samsung-Total Petrochemicals capacities in Daesan (South Korea). |
The petrochemical business, grouped under Total Petrochemicals, includes base petrochemicals (olefins and aromatics) and their polymer derivatives (polyethylene, polypropylene and styrenics).
TOTAL’s main petrochemical sites are located in Belgium (Antwerp, Feluy)
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, France (Carling, Feyzin, Gonfreville, Lavéra), the United States (Carville in Louisiana and Bayport, La Porte and Port Arthur in Texas), 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 petrochemical operations are closely integrated within the Group’s refining operations. TOTAL owns a 50% interest in the Daesan petrochemical site in South Korea, in partnership with Samsung. This integrated site is located 400 km off the Chinese coast.
In Qatar, 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. TOTAL has continued to strengthen its leadership positions in the industry by focusing
(1) | Based on publicly available information, consolidated sales. |
TOTAL continues to strengthen its leadership positions in the industry by focusing on the following three main strategic areas: InEurope, TOTAL is improving the competitiveness of its long-established sites notably through cost management, better energy efficiency at its facilities and increased flexibility in the choice of feedstock. In an increasingly competitive environment, the Group launched two reorganization plans mainly for the Carling (eastern France) and Gonfreville (northwestern France) sites: | – | | In mature markets, TOTAL is improving the competitiveness of its long-established sites notably through costs management, better energy efficiency at its facilities and more flexibility in the choice of feedstock.
In an increasingly competitive environment, the GroupThe first plan, launched two reorganization plans, one in 2006, and another in 2009,called for the Carling and Gonfreville sites in France:
| • | | The first plan called for the closing of a steam crackerclosure of one of the steam crackers and the styrene plant at Carling and the construction of a new world-class(1) styrene plant at Gonfreville to replace the plant closed in late 2008. The reorganization plan was completed in the first quarter of 2009.
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| – | | The second plan, launched in 2009, is focused on a consolidation project to consolidateimprove the petrochemical business to improvesites’ competitiveness. This project includes a plan to upgrade the Group’s most efficient units by investing approximately€230 million over three years to increase energy efficiency and competitiveness of the steam cracker and the high-density polyethylene unit in Gonfreville, and to consolidate polystyrene production at the Carling facility. It also includes the shutdown of 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.
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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. 1.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. |
| | a plan to upgrade the Group’s most efficient units by investing approximately€230 million to increase energy efficiency to the most efficient level and improve the competitive strength of the steam cracker and high-density polyethylene unit in Gonfreville, and to consolidate polystyrene production at the Carling facility. It will also lead to the closing of structurally loss-making units: two low-density polyethylene lines, one in Carling (eastern France) and one in Gonfreville (northwestern France), and a polystyrene line in Gonfreville. This reorganization plan is also intended to improve the efficiency of the support services at both sites and of the central services at Total Petrochemicals France.
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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 Normandy, this dedicated facility will have to be closed. Closure is expected in 2010.
TOTAL is continuing to expand in growth areas.
In Asia, the joint venture Samsung-Total Petrochemicals Co. Ltd inaugurated in September 2009 a polypropylene compounding plant located in Dongguang, China, and continues to optimize operations with the construction of a jet fuel production plant to develop co-products and a butane storage tank. This storage tank is intended to increase flexibility for the steam cracker feedstocks. In 2008, the joint venture completed 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 through the expansion of the steam cracking and styrene units, the construction of a new polypropylene line in 2007 and the start-up of a new metathesis(1) plant in 2008.(2)
| In the Middle East, construction of a 700 kt/y paraxylene unit at the Jubail refinery in Saudi Arabia was approved in May 2008 by TOTAL and Saudi Aramco. This world-class unit(2) is intended to supply the Asian market. Start-up is scheduled for 2013.TOTAL is developing sites in countries with favorable access to raw materials.
In Qatar, through its interest in Qatofin and Qacpo, TOTAL holds a 49% interest in a Qatofin-operated world-class linear low-density polyethylene plant with a capacity of 450 kt/y in Mesaieed, which
started production in August 2009, as well as 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 in March 2010.
In addition, construction of a 300 kt/y low-density polyethylene line is expected at Qapco, in which TOTAL holds a 20% interest, with commissioning scheduled in 2012.
Pursuant to the contract signed in July 2007, TOTAL is continuing discussions with Sonatrach, the Algerian national oil company, related to the construction a petrochemical site in Arzew (Algeria). The contemplated project includes an ethane-based steam cracker with production capacity of 1.1 Mt/y, two polyethylene units and a monoethylene glycol production unit. This world-class project would benefit from access to a particularly competitive feedstock and would be 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 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, coal and biomass, and to consider new methods to produce polyolefins.
In 2009, the Chemicals segment continued to improve its safety performance by focusing on on-the-job safety, safety management systems and major risk prevention. However, in the second half of 2009, the Chemicals segment faced four serious accidents. As a result, TOTAL launched a general review of thirteen French sites presenting technological risks, including two petrochemical sites (Gonfreville and Carling) and three sites from its Fertilizers business (Mazingarbe, Grandpuits and Grand Quevilly). The Group is concerned by these events, especially since safety results were steadily improving on the whole and work accident indicators were halved between 2005 and 2009.
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 this business is strongly influenced by supply and demand and by changes in the price of naphtha, the principal raw material used.
1. | Conversion of ethylene and butene into propylene.Ethylene Vinyl Acetate. |
2009 was marked by a deterioration of margins due to a continuous increase in feedstock prices and the decline in demand for olefins and aromatics in Europe and the United States. The estimated utilization rate of steam crackers(1) in the industry worldwide decreased from 91% in 2005-2007 to 86% in 2008 and 85% in 2009 due to the commissioning of new capacities in the Middle East and the decrease in global demand.
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 benefits from favorable access to the raw material, ethane, to produce ethylene.
In 2009, demand growth was weak, estimated at +0.8% worldwide, with strong differences depending on regions: falling demand in mature zones (Europe and the United States) and strong growth in China (more than 25%), driven by a domestic demand satisfied by the significant increase in importations.
TOTAL’s polyethylene sales volume dropped by 4% in 2009 compared to 2008 and margins remained weak in Europe. In the United States, margins maintained at a higher level mainly due to the competitive price of ethane-based ethylene. In Europe, the pressure on margins is expected to persist with the start-up of new ethane-based units in the Middle East, which began in late 2009, and in Asia.
In this context, TOTAL intends to focus on lowering the break-even point in its plants in Europe 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, household, appliances, fabrics and health care markets. Margins are mainly influenced by the level of demand and the availability and price of propylene.
Highlights of 2009 included the slight recovery in the global marketplace, estimated at +1.8%, that was driven, like polyethylene, by increasing Chinese domestic demand.
Compared to 2008, TOTAL’s sales volumes increased by 6% due to positive contributions from every region. To face the increasing competition from new plants in the Middle East, TOTAL owns plants with industrial performance, both in Europe and the United States, which place the Group among the industry’s leaders.
Styrenics
This line of business includes the production of styrene and polystyrene. Most of the styrene manufactured by the Group is used to produce polystyrene, a plastic principally used in food packaging, insulation, refrigeration, domestic appliances and electronic devices. Margins are strongly influenced by the level of polystyrene demand and the price of benzene, which is polystyrene’s principal raw material.
In 2009, the global styrene market decreased by 3%. The global polystyrene market decreased by approximately 4% due to the weakness of the construction, refrigeration and television markets in mature zones. Nonetheless, 2009 was also marked by the recovery of growth in China, exceeding 10%, due to programs implemented to stimulate domestic demand.
In 2009, TOTAL’s polystyrene sales volumes increased by 1%, driven by an increase in sales in Asia (+13%).
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. 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. After a record high in 2008, the European fertilizers market decreased by more than 10% in 2009 and returned to the levels recorded in 2005-2006. Following the collapse of urea prices in late 2008, prices of nitrogen products decreased sharply in early 2009, leading to a drop in margins.
The Fertilizers business continued its major restructuring plan initiated in 2006:
In France, GPN ceased production of complex fertilizers that are made from nitrogen, phosphorus and potassium products, due to the declining market for these products, and closed its plants in Bordeaux, Basse Indre 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.
1. | Based on publicly available information. |
• | | 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 core activity of the Fertilizers business, which is the production of nitrogen fertilizers, was strengthened through a major investment in the construction of a competitive nitric acid plant in Rouen, which started up in the second half of 2009, and a urea plant in Grandpuits, which is expected to start up in the second quarter of 2010. This additional urea production is expected to position GPN in the growing markets of products that contribute to reducing nitrogen oxide emissions(1): DENOX® for industrial applications and Adblue® for transportation applications.
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In France, the Oissel site and three obsolete nitric acid units in Rouen and Mazingarbe were closed in 2009.
The Group is considering the sale of its mine and quarries business at Mazingarbe. Sale of this business has been submitted to prior consultation with employee representative organizations and to the approval by the relevant authorities.
This plan is expected to improve the competitiveness of GPN by regrouping its operations at two sites which feature production capacity greater than the European average.
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 the rubber processing (Hutchinson), consumer products (Mapa® and Spontex®), resins (Cray Valley, Sartomer and Cook Composites & Polymers), adhesives (Bostik) and electroplating (Atotech) businesses. The division serves consumer and industrial markets for which customer-oriented marketing and service as well as innovation(1) | Nitrogen oxide emissions are 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 on growing markets and focusing on the marketing of new products with high added value.In 2009, Specialty Chemicals faced a difficult environment duenoxious to the global economic slowdown, especially in the first half of the year. In this adverse environment, Specialty Chemicals sales decreased by 13% compared to 2008. Results substantially increased in the second half of 2009 compared to the same period in 2008, due to improving margins and cost reduction programs.
Rubber processing
Hutchinson manufactures and markets products derived from rubber processing that are principally intended for the automotive, aerospace and defense industries.
Hutchinson, among the industry’s leaders(2), provides its customers with innovative solutions in the areas of fluid transfer, water and airtightness, transmission, mobility and vibration, as well as sound and thermal insulation.
Hutchinson’s 2009 sales decreased by 11% in an uneven environment depending on the lines of business. Automotive products sales decreased substantially compared to 2008 in a challenging market environment,
especially in the first half of the year, both in North America and in Europe. In other industrial markets, sales increased slightly in 2009 compared to 2008 due to sustained demand from the defense, aerospace and railway industries.
To strengthen its position in the aerospace industry, Hutchinson acquired Strativer in late 2008, a company that specializes in the expanding composite materials industry.
Throughout 2009, Hutchinson continued to develop in expanding markets, primarily Eastern Europe, South America and China, relying notably on the sites opened in 2006 in Brasov (Romania), Lodz (Poland) and Suzhou (China) and in 2009 in Sousse (Tunisia).
Consumer products
The Consumer products business is organized into baby care products (Nuk® and Tigex®) and household specialties (Mapa® and Spontex®). The baby care products sector strengthened in 2009 with the acquisition of Gerber in late 2008. As a result, sales increased by 11% in 2009 compared to 2008. These markets depend heavily on the level of household consumption and due to the economic slowdown, like-for-like consumption was lower on both markets. Thanks to brand recognition, the Consumer products business is expected to continue to grow in Europe, the United States and emerging countries.
In early 2010, TOTAL launched a process to sell its Consumer products business. Sale of this business has been submitted to prior consultation with employee representative organizations and to the approval by the relevant authorities.
1. | Nitrogen oxide emissions are harmful to the environment and subject to regulation. |
(2) | Based on publicly available information, consolidated sales. |
2. | Based on publicly available information, consolidated sales. |
Resins
TOTAL produces and markets resins for adhesives, inks, paints, coatings and composite materials through three subsidiaries: Cray Valley, Sartomer, and Cook Composites & Polymers.
In 2009, sales decreased by 22%, reflecting the ongoing economic slowdown in the United States, which is the main market segment for the Resins business, and decreasing volumes in Europe.
In this environment, all the subsidiaries accelerated their programs to reduce fixed costs in Europe and the United States. In addition, they continued to refocus on their most profitable lines of business through a selective investment policy targeting in particular the most dynamic geographical areas. For instance, Sartomer continued to expand in China from its Nansha plant that started up in April 2008.
Adhesives
Bostik is one of the world leaders in its sector, based on sales(1), with leading positions in the industrial, hygiene, construction and consumer and commercial distribution markets.
In 2009, Bostik’s sales decreased by 8% compared to 2008. These comparatively positive 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.
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. For instance, new production units were commissioned in China (Zhuhai) and Australia (Sydney). In September 2009, Bostik launched the construction of a plant in Changshu (China) that is expected to eventually become the company’s largest plant.
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 business, is the second largest company in this sector based on worldwide sales(1). It is active in both the electronics (printed circuits, semiconductors) and general metal finishing markets (automotive, sanitary goods, furnishing).
The electroplating business was impacted by the global economic slowdown that affected the automotive and the electronics industries. Sales decreased by 20% in 2009 compared to 2008.
In this context of economic slowdown, Atotech successfully pursued its strategy designed to better differentiate its products through comprehensive service provided to its customers in terms of equipment, processes, design, 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. Finally, Atotech intends to continue to develop 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 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, 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. (1) | Based on publicly available information, consolidated sales. |
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 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. |
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 representedinto national legislation 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 assistedEU Member States 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 different for each of these activities. These permits are granted for limited periods of time and include an obligation to return a large portion, in case of failure 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. Some of TOTAL’s operated sites in the United States are subject to the Occupational Safety and Health Administration (“OSHA”) Process Safety Management of Highly Hazardous Materials, as well as other OSHA regulations.
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 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 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 (population density, environmental considerations).
Most of these activities also 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 Exploration & 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 cause injury or even death, damage or even destroy crude oil or natural gas wells as well as related equipment and other property, lead to a disruption of activity or cause environmental damage. In addition, since exploration and production activities may take
place on sites that are ecologically sensitive (tropical forest, marine environment, etc.), each site requires a risk-based approach to avoid or minimize the impact on human health, the related ecosystem and biodiversity.
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, 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, which may, for example, be flammable, toxic, or result in long-term environmental impacts such as greenhouse gas emissions. Risk 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 to extensive and increasingly strict health, safety and environmental (“HSE”) regulations in the European Union, the United States and worldwide.
The following is a non-exhaustive list of HSE directives that affect TOTAL’s operations and products in the European Union:
The Integrated Pollution Prevention and ControlJanuary 7, 2013. This Directive (“IPCC”) provides for a cost/benefit framework used to comprehensively assess the environmental quality standards, prior environmental impacts, and potential additional emissions limits on, large industrial plants, including refineries and chemical sites. A proposed Industrial Emission Directive would replacereplaced a number of existing industrial emission directives, including the IPPCIntegrated Pollution Prevention and Control Directive (2008/1/EC — “IPPC”) and the Large Combustion Plant Directive and could result in stricter emission limits on some of TOTAL’s facilities.
The Air Quality Framework Directive and related directives on ambient air quality assessment and management, among other things, limit emissions for sulphur dioxide, oxides of nitrogen, particulate matter, lead, carbon monoxide, benzene and ozone.
The Sulphur Content Directive limits sulphur in diesel fuel to 0.1% (since January 2008) and limits sulphur in heavy fuel oil to 1% (since January 2003), with certain exceptions for combustion plants provided that local air quality standards are met.
The Large Combustion Plant Directive, effective since 2008, limits certain emissions, including sulphur dioxide, nitrogen oxides and particulates, from large combustion plants.
Existing Directives controlling and limiting exhaust emissions from cars and other motor vehicles are expected to continue to become more stringent over time. Since 2009, a maximum sulphur content of 10 ppm is mandatory throughout the European Union.
The 1996 Major Hazards Directive (Seveso II) requires emergency planning, public disclosure of emergency plans, assessment of hazards and effective emergency management systems. EU Member States have implemented this Directive and provided for associated criminal sanctions.
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 waste related directives by 2010.
A number of Maritime Safety Directives were passed in the wake of the Erika spill. Recent regulations require that tankers have double hulls and that ship owners acquire improved insurance coverage, mandate improvements to traffic monitoring, accident investigations and in-port vessel inspection (Port State Control), and further regulate organizations that inspect and confirm conformity to applicable regulations (Classification Societies)(2001/80/EC).
Numerous Directives impose water quality standards based on the various uses of inland and coastal waters, including ground water, by setting limits on the discharges of many dangerous substances and by imposing information gathering and reporting requirements.
Adopted and effective since 2003, a comprehensive Framework Water Directive has been progressively replacing numerous existing Directives with a comprehensive set of requirements, including additional regulations obligating member countries to classify all water courses according to their biological, chemical and ecological quality, and to completely ban the discharges of approximately thirty toxic substances by 2017.
Numerous Directives regulate the classification, labellingand packaging of chemical substances
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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 | | their preparation, as well as restrict and ban the use
| | of certain chemical substances and products. On the one hand, the EU Parliament and Council adopted a new regulation in December 2008 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 Harmonised 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. As of December 2008, 165,000 substances had been pre-registered. This regulation is expected to impose substantial costs on TOTAL’s operations in the European Union. |
In March 2004, the European Union adopted a Directive on Environmental Liability. This Directive was transposed into EU Member State national legislations in 2007 and 2008, and in France in August 2008. The Directive seeks to implement a strict liability approach for damage to water resources, soils and protected species and habitats by authorized industrial activities.products.
Directives implementing the Aarhus Convention concerning public information rights and certain public participation rights in a variety of activities affecting the environment were adopted in January and May 2003, respectively, and implemented in most national EU legislations.
In November 2008, the European Union adopted a Directive on the protection of the environment through criminal law that obliges EU Member States to provide for criminal penalties in respect of serious infringements of EC law. EU Member States must transpose this Directive into their national legislation by December 26, 2010.
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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 also subject to extensive workplace safety regulations initiated by the European Community and defined and promulgated by each Member State. With respect to the climate change issue, numerous initiatives in the European Union are pending or currently being revised, including:
| – | | A September 2003 Directive implementing the Kyoto Protocol within the European UnionEU established an emissions trading |
| | established a system effective as of January 2005 for greenhouse gas emissions quotas. This system requires EU Member States to prepare, under the supervision of the EU Commission, national emissions plans identifying a global amount of quotas to be shared and delivered by the governments to each industrial installation of specific sectors, in particular the energy one. On the basis of these quotas, carbon dioxide emissions permits are then distributed. In accordance with the 2009 revision of the aforementioned directive, a quota auctioning mechanism is scheduled to be set up in 2013.
| | 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. |
| – | | At the UN summit in Copenhagen in December 2009, world leaders recognized the need to limit global temperature increases to two degrees celsius above pre-industrial levels, which could result in future directives limiting emissionsThe first period of greenhouse gases in the European Union, or potential international agreements.
The Kyoto Protocol is reaching an end in 2012. Although debates occurredThe Cancun UN conference at the December 2009 UN Summit in Copenhagen, no decision as toend of 2010 reaffirmed the follow-up was made. The future conferences on the subject scheduled for 2010 couldprinciples of Kyoto, but did not result in the adoption of international agreementsany 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, by 2020, and requires Member States to improve energy efficiency by 20% and to increase renewable energy usage. This legislation is likelyusage by 20%. In 2011, the European Commission published its “Roadmap for moving to a competitive low-carbon economy in 2050” to look beyond these 2020 objectives and to set out a plan to meet the long-term target of reducing domestic emissions by 80 to 95% by mid-century. The sectors most responsible for emissions in the |
| | EU (i.e., power generation, industry, transport, buildings and construction, as well as agriculture) are charged with making the transition to a low-carbon economy over the coming decades and these issues could affect TOTAL’s operations in the future. |
| – | | The 2009 Directive on Carbon Capture and Storage (CCS) has been adopted and is currently beingwas transposed into Member States’ national legislations.in France in 2010. This legal framework forms the basis for developing CCS projects that are expected to serve as one of the most valuable solutions for the reduction of carbon dioxide emissions. Such projects are likely toregulations will have technical and financial impacts.impacts, including on TOTAL’s 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: 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. In France, the provisions of the 2010 financial bill establishing a carbon tax was deemed unconstitutional and referred back to the French government, which is currently
| | preparing a new proposal. Should a carbon tax similar to the one in the 2010 financial bill be adopted, TOTAL’s industrial facilities may incur capital and operating costs.
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In the United States, where TOTAL’s operations are less extensive than in Europe, TOTAL is also subject to significant HSE regulations at both the state and federal levels. Of particular relevance to TOTAL’s lines of business are:
The Clean Air Act and its regulations, which require, among other measures: stricter phased-in fuel specifications and sulphur reductions; enhanced emissions controls and monitoring at major sources of volatile organic compounds, nitrogen oxides, and other designated hazardous and non-hazardous air pollutants; stringent pollutant emission limits; construction and operating permits for major air emission sources at chemical plants, refineries, marine and distribution terminals and other facilities; and risk management plans for the handling and storage of hazardous substances.
The Clean Water Act, which regulates the discharge of wastewater and other pollutants from both onshore and offshore operations and, among other measures, requires industrial facilities to obtain permits for most wastewater and surface water discharges, install control equipment and treatment systems, implement operational controls, and preventative measures, including spill prevention and control plans and practices to control storm water runoff.
The Resource Conservation and Recovery Act, (RCRA), which regulates the generation, storage, handling, treatment, transportation and disposal of hazardous waste and imposes corrective action requirements on regulated facilities requiring investigation and remediation of potentially contaminated areas at these facilities. • | | The Comprehensive Environmental Response, Compensation, and Liability Act (also known as CERCLA or Superfund), under which waste generators, former and current site owners and operators, and certain other parties can be held jointly and severally liable for the entire cost of remediating active, abandoned or non-operating sites contaminated by releases of hazardous substances regardless of fault or the amount or share of hazardous substances sent by a party to a site. The U.S. Environmental Protection Agency (“EPA”) has authority under Superfund to order responsible parties to clean up contaminated sites and may seek recovery of the government’s response costs from responsible parties. States have similar legal authority to compel site | | investigations and cleanups and to recover costs from responsible parties. The U.S. government and states may also sue responsible parties 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 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, spill liability for tankers and barges transporting oil, offshore oil platform facilities and onshore terminals and sets up an oil liability spill fund paid for by taxes on imported and domestic oil.
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 facilities in the United States are also subject to extensive workplace safety regulations promulgated by OSHA. Most notable among OSHA regulations is the Process Safety Management of Highly Hazardous Chemicals (PSM), a comprehensive regulatory program that requires major industrial sources, including petroleum refineries and chemical manufacturing facilities, to undertake significant hazard assessments during the design of new industrial processes and during modifications to existing processes.
In 2009, the EPA issued a finding that greenhouse gas (“GHG”) emissions endanger public health and the environment. This endangerment finding would allow the EPA to regulate these emissions under the Clean Air Act. The EPA has also proposed to regulate GHG emissions from automobiles and new or existing industrial facilities and plans to issue regulations in 2010. These proposed rules may result in limits being placed on GHG emissions from petroleum refineries, chemical plants and other large industrial sources, including TOTAL’s facilities in the United States.
In response to public concerns over the effects of climate change, a number of legislative initiatives are currently pending in the U.S. Congress, including the American Clean Energy and Security Act (ACES), passed by the U.S. House of Representatives in June 2009, and draft legislation in the U.S. Senate that contain requirements intended to limit GHG emissions from industrial sources through “cap-and-trade” market mechanisms. Should a GHG cap-and-trade system,
carbon tax or other GHG regulation become law, industrial facilities owned by TOTAL subsidiaries in the United States may incur additional capital and operating costs to comply with such legislation including the acquisition of emissions allowances to continue operating.
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 ongoing during their operation, business units evaluate the related industrial and environmental risks, taking into account regulatory requirements in the countries where these activities are located as well as recognized and generally accepted good engineering practices.
On sites with significant technological risks, Process Hazard Analyses are performed on all new processes and on existing processes where significant changes are proposed. These analyses are generally re-evaluated every five years. To ensure risks are appropriately analyzed and monitored, TOTAL has developed a Group-wide risk management approach, which is being implemented progressively throughout the sites it operates. On the basis of these analyses, relevant sites are finalizing safety management plans and emergency plans in the event of accidents. In the United States, TOTAL is implementing a Process Safety Management Improvement Plan (PSMIP).
In France, all the sites that meet the criteria of the European Union Seveso II directive are 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 that are considered as high risk according to the Seveso II directive criteria. French administrative authorities are preparing such plans while taking into account input from site operators and neighboring residents.
Similarly, environmental impact studies are carried out prior to any industrial development through a thorough initial site analysis, taking into account any special sensitivity as well as developing plans to prevent and reduce the impact of accidents. These studies also take into account the health impact of such operations on the local population, based on a shared methodology. 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 the authorities are provided with.
For new products, risk characterizations and evaluations are carried out. Furthermore, life cycle analyses for related risks are performed on certain products to study all the stages of a product’s life cycle from its conception until the end of its useful life.
TOTAL’s entities actively monitor regulatory developments to comply with local and international rules and standards for the evaluation and management of industrial and environmental risks. In case of operations being stopped, 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.
Risk management
Risk management control measures involve equipment design, the reinforcement of safety devices, the design of structures to be built and the protection against the consequences of environmental events.
TOTAL seeks to minimize industrial and environmental risks inherent to its operations and to this end, has developed efficient organizations as well as quality, safetyrecover costs from responsible parties. The U.S. government and environmental management systems. The Group isstates may also targeting the certificationsue responsible parties under CERCLA for or assessment of its management systems (including International Safety Rating System, ISO 14001, European Management and Audit Scheme) and conducts thorough inspections and audits, trains appropriate personnel, heightens awareness of all the parties involved and implements an active investment policy.
More specifically, following up on the Group’s 2002-2005 plan, an action plan was defined by the Group for the 2006-2009 period that focused on two initiatives for improvement: reducing the frequency and severity of on-the-job accidents and strengthening the management of technological risks. The results relateddamage to reducing on-the-job accidents are in line with the goals set by the plan, with a significant decrease in the rate of accidents (with or without time-lost) per million hours worked by more than 75% between the end of 2001 and the end of 2009. In terms of technological risks, this plan’s initiatives include specific organization and behavioral plans as well as plans to minimize risks at the source and to increase safety for people and for equipment use.
Several environmental action plans have been implemented for different activities of the Group covering periods up to 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.
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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, most notably, greenhouse gas emissions, water pollution as well as sulphur dioxide emissions and to improve energy efficiency. As part of its efforts to combat climate change and reduce greenhouse gases, the Group committed to reducing gas flaring at its Exploration & Production sites by 2014 to 50% of the 2005 level. By the end of 2012, the Group intends to obtain ISO 14001 certification for all of its sites that it considers particularly important to the environment according to criteria updated in 2009. As of today, 89% of such sites are ISO 14001-certified, representing more than 280 of the Group’s sites worldwide. These activities are monitored through periodic and 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 affected by reports of occupational diseases caused by asbestos exposure. The circumstances described in these reports generally concern activities prior to the beginning of the 1980s, long before the adoption of more comprehensive bans on the new installation of asbestos-containing products in most of the countries where the Group operates (January 1, 1997, in France). The Group’s various businesses are not particularly likely to lead to significant exposure to asbestos-related risks, since this material was generally not used in manufacturing processes, except in limited cases. The main potential sources of exposure are related to the use of certain insulating components in industrial equipment. These components are being gradually eliminated from the Group’s equipment through asbestos-elimination plans that have been underway for several years. However, considering the long period of time that may elapse before the harmful results of exposure to asbestos arise (up to 40 years), TOTAL anticipates that other reports may be filed in the years to come. Asbestos-related issues have been subject to close monitoring in all the Group’s business units. As of December 31, 2009, the Group estimates that the ultimate cost of all asbestos-related claims paid or pending is not likely to have a material effect on the financial situation of the Group.
Oil and gas exploration and production operations
Oil and gas exploration and production require high levels of investment and are associated with particular risks and opportunities. These activities are subject to risks related specifically to the difficulties of exploring underground, to the characteristics of hydrocarbons and to the physical characteristics of an oil or gas field. Of risks related to oil and gas exploration, geologic risks are the most important. For example, exploratory wells may not result in the discovery of hydrocarbons, or may result in amounts that would be insufficient to allow for economic development. Even if an economic analysis of estimated hydrocarbon reserves justifies the development of a discovery, the reserves can prove lower than the estimates during the production process, thus adversely affecting the economic development.
Almost all the exploration and production operations of TOTAL are accompanied by a high level of risk of loss of the invested capital due to the risks related to economic or political factors detailed hereafter. It is impossible to guarantee that new resources of crude oil or of natural gas will be discovered in sufficient amounts to replace the reserves currently being developed, produced and sold to enable TOTAL to recover the capital it has invested.
The development of oil and gas fields, the construction of facilities and the drilling of production or injection wells require advanced technology in order to extract and exploit fossil fuels with complex properties over several decades. The deployment of this technology in such a difficult environment makes cost projections uncertain. TOTAL’s operations can be limited, delayed or 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
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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; 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;
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: 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 | | 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 contractual 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 as politically and economically unstable. These reserves and the related operations are subject to certain additional risks, including:
the establishment of production and export quotas;
the compulsory renegotiation of contracts;
the expropriation or nationalization of assets;
risks relating to changes of local governments or resulting changes in business customs and practices;
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.
Business Activities in Cuba, Iran, Sudan and Syria
The U.S. Department of State has identified Cuba, Iran, Sudan and Syria as state sponsors of terrorism. Provided in this section is certain information relating to TOTAL’s activities in these jurisdictions.
U.S. and Other Legal Restrictions
In 1996, the United States adopted legislation implementing sanctions against non-U.S. companies doing business in Iran and Libya (the Iran and Libya
Sanction 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”).
The ISA is set to expire in December 2011. Pursuant to this statute, the President of the United States is authorized to initiate an investigation into the activities of non-U.S. companies in Iran and the possible imposition of sanctions (from a list that includes denial of financing by the U.S. Export-Import Bank, limitations on the amount of loans or credits available from U.S. financial institutions and prohibition of U.S. federal procurements from sanctioned persons) against persons found, in particular, to have knowingly made investments of $20 million or more in 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 the ILSA (now ISA). It also prohibits TOTAL from having its waiver for South Pars extended to other activities.
In each of the years since the passage of the ILSA and until 2007, TOTAL made investments in Iran in excess of $20 million (excluding the investments made as part of the development of South Pars). Since 2008, TOTAL’s position has consisted essentially in being reimbursed for its past investments as part of buyback contracts signed between 1995 and 1999 with respect to permits on which the Group is no longer the operator. In 2009, TOTAL’s production in Iran represented approximately 0.4% of the Group’s worldwide production. TOTAL does not believe that its operations 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 Iran. To our knowledge, sanctions under the ISA have not been imposed on any non-U.S. oil and gas company which has investments in Iran. However, TOTAL cannot predict whether the U.S. government will take any action under the ISA with respect to its previous or possible future activities in Iran. It is possible, however, that the United States may determine that these or other activities constitute activity prohibited by the ISA and will subject TOTAL to sanctions. TOTAL does not believe that enforcement of the ISA against TOTAL, including the imposition of the maximum sanctions under the current version of the ISA, would have a material adverse effect on its results of operations or financial condition, although it could result in reputational harm.
However, the U.S. House of Representatives and the Senate have recently passed bills which, if adopted, would expand the scope of the ISA and could restrict
the President’s ability to grant waivers. The proposed legislation would, among other things, require imposition of specific sanctions against companies that supply refined petroleum products to Iran, contribute to Iran’s ability to maintain or expand domestic production or engage in certain related conduct. The sanctions to be imposed against violating firms would generally prohibit transactions in foreign exchange by the sanctioned company, prohibit any transfers of credit or payments between, by, through or to any financial institution to the extent that such transfers or payments involve any interest of the sanctioned company, and require blocking of any property of the sanctioned company that is subject to the jurisdiction of the United States. The bills would also generally forbid federal procurements from and assistance to non-U.S. companies that engage in sanctions-triggering actions.
TOTAL is closely monitoring legislative and other developments in the United States in order to determine whether its limited activities in Iran could subject it to application of either current or any future ISA sanctions. In the event the proposed legislation were adopted in its current form, such new legislation could potentially have a material adverse effect on TOTAL.
France and the European Union 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. As currently applicable, the Group believes that these measures are not applicable to its activities and projects in this country.
The United States also imposes sanctions based on the United Nations Security Council resolutions described above, as well as broad and comprehensive economic sanctions, which are administrated by the U.S. Treasury Department’s Office of Foreign Assets Control (referred to as “OFAC”). These OFAC sanctions generally apply to U.S. persons and activities taking place in the United States or that are otherwise subject to U.S. jurisdiction. Sanctions administered by OFAC target Cuba, Iran, Myanmar (Burma), Sudan and Syria. TOTAL does not believe that these sanctions are applicable to any of its activities in these countries.
In addition, many 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. Recently, there have been similar initiatives by state insurance regulators relating to investments by insurance companies in companies doing business with the Iranian oil and gas, nuclear and defense sectors. TOTAL has no business operations in Sudan and, to date, has not made any significant
investments or industrial investments there. The Genocide Intervention Network (formerly known as Sudan Divestment Task Force) report states that TOTAL should be regarded as “inactive” in Sudan by the U.S. states that have adopted such divestment legislation. On December 31, 2007, the U.S. Congress adopted the Sudan Accountability and Divestment Act, which supports these state legislative initiatives. Similar legislation is pending in the U.S. Congress that supports state legislative initiatives regarding Iran. If TOTAL’s operations in Iran or Sudan were determined to fall within the prohibited scope of these laws, and TOTAL were to not qualify for any available exemptions, certain U.S. state pension funds holding interests in TOTAL may be required to sell their interests. If significant, sales resulting from such laws and/or regulatory initiatives could have an adverse effect on TOTAL’s share price.
Activities in Cuba, Iran, Sudan and Syria
Provided below is certain information on TOTAL’s activities in Cuba, Iran, Sudan and Syria.
Cuba
In 2009, TOTAL 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€18 million.
Iran
TOTAL’s Exploration & Production division has been active in Iran through buyback contracts. Under such contracts, the contractor is responsible for and finances development operations. Once development is completed, operations are handed over to the national oil company, which then operates the field. The contractor receives payments in cash or in kind to recover its expenditures as well as a remuneration based on the field’s performance. Furthermore, upon the national oil company’s request, a technical services agreement may be implemented in conjunction with a buyback contract to provide qualified personnel and services until full repayment of all amounts due to the contractor.
To date, TOTAL has entered into such buyback contracts 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. In addition, a technical services agreement exists with respect to the Dorood field. As TOTAL is no longer involved in the operation of these fields, TOTAL has no information on the production from these fields. Some payments are yet to be reimbursed to
TOTAL with respect to South Pars 2 & 3, Balal and Dorood. In 2009, TOTAL’s production in Iran, corresponding to such payments in kind,liability (including potential accidental environmental liabilities) was approximately 8 kboe/d.capped at $850 million.
No royalties or fees are paid by the Group in connection with these buyback and service contracts. In 2009, 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 activities in Iran, Beh Total, a company held 50/50 by Behran Oil and Total Outre-Mer, a subsidiary of the Group, produces and markets small quantities of lubricants for sale to domestic consumers in Iran. In 2009, revenue generated from Beh Total’s activities was€27.4 million and cash flow was€5.6 million. Beh Total paid€605,000 in taxes. TOTAL does not own or operate any refineries or chemicals plants in Iran.
In 2009, TOTAL’s Trading & Shipping division purchased in Iran pursuant to a mix of spot and term contracts approximately fifty-eight million barrels of hydrocarbons from state-controlled entities for approximately€2.6 billion, and paid to a state-owned entity approximately€24 million pursuant to shipping contracts.
Sudan
TOTAL holds an 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 Group’s initial interest was 32.5%. Despite the withdrawal of a partner, TOTAL does not intend to increase its interest above its initial level. Consequently, the Group has entered into negotiations with new partners to transfer the former partner’s interests for which the Group financially carries a share.
The EPSA was revised, effective December 21, 2004, to provide that the parties (the Government of Sudan and the consortium partners) would mutually agree upon a resumption date when the petroleum operations could be safely undertaken in the contract area. Such resumption date would mark the starting point of the Group’s work obligations as foreseen in the contract. A joint decision on the resumption date has not yet been taken.
Pursuant to the EPSA in 2009, TOTAL paid to the Government of Sudan an annual surface rental fee of approximately $200,000 and disbursed nearly $3 million as scholarship bonus, social development contribution and contribution to the construction of social infrastructures, schools and water wells along
|
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. non-governmental organizations and other stakeholders involved in Southern Sudan.
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 its scope of operations and authority, the Group is committed to upholding human rights and fundamental freedoms, including social, economic and cultural rights, and the rights and interests of local residents and minorities. In particular, the Group is studying the situation with non-governmental organizations (NGOs) and stakeholders involved in Southern Sudan and conducting socio-economic programs adapted to the needs of the local population.
Syria
In Syria, in 2009, 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 is operating 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 Syrian Petroleum Company (“SPC”).
The main terms of PSA 1988 are similar to those normally used in the oil and gas industry. The Group’s revenues derived from PSA 1988 are made up of a combination of “cost oil” and “profit oil”. “Cost oil” represents the reimbursement of operating and capital expenditures and is accounted for in accordance with normal industry practices. The Group’s share of “profit oil” depends on the total annual production level. TOTAL receives its revenues in cash payments made by SPC. TOTAL pays to the state-owned Syrian company SCOT a transportation fee equal to $2/bl 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 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. TOTAL is financing and implementing the Tabiyeh Gas Project and operates the Tabiyeh field.
For 2009, technical production for PSA 1988 (for full year 2009) and the Tabiyeh contract (since October 2009, the effective date of the contract) taken together amounted to 36 kboe/d of which 20 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 2009, TOTAL’s Trading & Shipping division purchased in Syria pursuant to a mix of spot and term contracts nearly twelve million barrels of hydrocarbons from state-controlled entities for approximately€472 million.
Competition
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. 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, 2009, 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 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 enables the Group to better manage changes in price in the insurance market by taking on a greater or lesser amount of risk corresponding to the price trends in the insurance market.
In 2009, the net amount of risk retained by OIRC after reinsurance was at a maximum of€50 million per property/business interruption insurance claim and€50 million 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 in case these catastrophic events should occur;
help in implementing measures to limit the probability that a catastrophic event occurs and the extent of such events; and
manage the level of risk from such events to be either covered internally by the Group or to be transferred to the insurance market.
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 2009 for general and product liability was $800 million.
Property damage and business disruption: 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 disruption coverage in 2009 for its main refining and petrochemical sites.
For example, for the highest estimated risks of the Group (floating production, storage and offloading units (FPSO) in Angola and main European refineries), the limit of indemnity was close to $1.5 billion in 2009.
Deductibles for property damages fluctuate between€0.1 million and€10 million depending on the level of risk, and are borne by the subsidiary. For business interruption, they represent sixty 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, 2009,2011, there were 712870 consolidated subsidiaries, of which 617783 were fully consolidated 12 were proportionately consolidated and 8387 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. Tender Offer by TOTAL S.A. for Outstanding Elf Aquitaine Shares
As of December 31, 2009, TOTAL S.A. held, directly and indirectly, 279,875,134 shares of Elf Aquitaine, taking into account the 10,635,844 Elf Aquitaine treasury shares held by Elf Aquitaine. This represented 99.48% of Elf Aquitaine’s share capital (281,343,859 shares) and 538,308,099 voting rights, or 99.72% of the 539,811,865 voting rights exercisable at Shareholders Meetings.
On March 24, 2010, TOTAL S.A. filed a public tender offer followed by a squeeze out with the FrenchAutorité des marchés financiers (AMF) in order to buy the 1,468,725 Elf Aquitaine shares that it does not already hold at a price of€305 per share (including the remaining 2009 dividend). Subject to a clearance decision from the AMF, the Elf Aquitaine shares targeted by the offer which have not been tendered to the offer will be transferred to TOTAL S.A. under the squeeze out on the first trading day after the offer closing date, upon payment to the shareholders equal to the offer price. After the squeeze out, TOTAL S.A. will hold all Elf Aquitaine shares either directly or indirectly. These shares will then be delisted from the Compartment of the delisted securities on the regulated market managed by Euronext Paris S.A.
Property, Plants and Equipment TOTAL has freehold and leasehold interests in numerous countries throughout the world, none of which is material to TOTAL. See “— Business Overview — Upstream” for a description of TOTAL’s reserves and sources of crude oil and natural gas. ITEM 4A. UNRESOLVED STAFF COMMENTS None.
ITEM 5. OPERATING AND FINANCIAL REVIEW AND PROSPECTS This section is the Company’s analysis of its financial performance and of significant trends that may affect its future performance. It should be read in conjunction with the Consolidated Financial Statements included elsewhere in this Annual Report. The Consolidated Financial Statements are prepared in accordance with International Financial Reporting Standards (IFRS) as issued by the IASB and IFRS as adopted by the European Union. This section contains forward-looking statements which are subject to risks and uncertainties. For a list of important factors that could cause actual results to differ materially from those expressed in the forward-looking statements, see “Cautionary Statement Concerning Forward-Looking Statements” on page vi.
Overview
OVERVIEW TOTAL’s results are affected by a variety of factors, including changes in crude oil and natural gas prices as well as refining and marketing margins, which are all generally expressed in dollars, and changes in exchange rates, particularly the value of the euro compared to the dollar. Higher crude oil and natural gas prices generally have a positive effect on the income of TOTAL, since its Upstream oil and gas business benefits from the resulting increase in revenues realized from production. Lower crude oil and natural gas prices generally have a corresponding negative effect. The effect of changes in crude oil prices on TOTAL’s Downstream activities depends upon the speed at which the prices of refined petroleum products adjust to reflect such changes. In the past several years, crude oil and natural gas prices have varied greatly, with prices increasing sharply until the fourth quarter of 2008, when prices dropped significantly.greatly. As TOTAL reports its results in euros, but conducts its operations mainly in dollars, the effect of an increase in crude oil and natural gas prices is partly offset by the effect of the variation in exchange rates during periods of weakening of the dollar relative to the euro and strengthened during periods of strengthening of the dollar relative to the euro. TOTAL’s results are also significantly affected by the costs of its activities, in particular those related to exploration and production, and by the outcome of its strategic decisions with respect to cost reduction efforts 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 production levels. However, the Euro zone’s turbulences during the fiscal year 2011 did not affect the Group significantly. For more information, see “Item 3. Key Information — Risk Factors” and “Item 4. Information on the Company — Other Matters”. In 2009,
The year 2011 witnessed a number of geopolitical events that put pressure on market supplies. Despite the oil and gas market environment was marked by a sharp decline in theeconomic slowdown, demand for oil naturalproducts 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 and refined products. Crude oil prices, nonetheless, rebounded duringin the United States remained very low, due to the continued rise in production, driven by the development of non-conventional gases. Despite the gradual adjustment of refining capacity, the overcapacity that has existed in the European refining market since 2009 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 first half of 2011, the Chemicals segment enjoyed a globally favorable environment, which has deteriorated since then. In the second half of the year, to average $61.7/b primarily thanksthe Base Chemicals and Specialty Chemicals divisions saw their margins shrink due to the support from OPEC reductions and the anticipation by the market of an economic recovery. In contrast, natural gas spot prices remained depressed and refining margins fell to historically low levels, under pressure from significant overcapacity. In Chemicals, despite strong demand for polymers in China, the environment was hurt by low margins and a sharp drop in demand in OECD markets.caused by the economic slowdown.
In this context,environment, TOTAL’s 2009 net income (Group share) wasamounted to€8,44712.3 billion, up 16% compared to€10.6 billion in 2010. This result essentially reflects a better Upstream environment, while the Downstream and Chemicals segments were faced with more difficult conditions than in 2010. The Upstream segment’s 2011 adjusted net operating income of€10.4 billion was up 21% compared with€8.6 billion in 2010 due to rising prices, but was also negatively impacted by the€-$ 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 operating income dropped by 10% to€775 million a decrease of 20% compared to 2008, mainlyin 2011 from€857 million in 2010, due to the negative impact of lower hydrocarbon prices and refining margins, partially offset primarily by the positive after-tax impact of prices on inventory valuation. In the fourth quarter 2009, based on a 6% increase in production in the Upstream segment, higher oil prices and Downstream segment results that remained slightly positive despite very weak refining margins, net income (Group share) rose to€2,065 million, an increase of 7% compared to the third quarter 2009. With its strong balance sheet and financial flexibility, TOTAL has been able to continue its investment program and dividend policy in 2009, while keeping its net-debt-to-equity ratio, in line with its objectives, at 27%more difficult market environment at the end of December 2009.the year and the asset sales in 2011 (resins, CEPSA).
InThe year 2011 saw numerous acquisitions and asset sales, reflecting the Upstream segment, five major projects started production in 2009 in Nigeria, the Gulf of Mexico, Angola, Qatar and Yemen. The Group also approved the investmentGroup’s ambition to launch the Surmont Phase II project in Canada, and, to further strengthenoptimize its portfolio entered intoby 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 numberdividend of joint ventures, notably€2.28 per share, which will be submitted for approval to the Shareholders’ meeting on May 11, 2012. The balance sheet remained strong, with Chesapeake and Cobalta 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 United States, Novatek in Russia, and Sonatrach in Algeria. These additions were made within the framework of the company’s strict financial criteria. In addition, cost reduction plans launched in late 2008 led to an 8% reduction in operating costs per barrel and allowed the company to maintain its technical costs at $15.4/boe, the same level as in 2008. The Downstream and Chemicals segments continued to implement plans to adapt to the particularly difficult conditions they faced in 2009 that included reducing capacity to restore profitability to these activities in an environment undergoing profound transformation. The measures taken in the modernization of the refining and
petrochemicals site at Normandy demonstrate the Group’s will to be socially responsible as it adapts its industrial operations to structural changes in the market.
In addition, outlays for research and development rose to€650 million in 2009, an increase of 6%Group-wide TRIR(3) compared to 2008. In particular, this allowed the Group to start up this year the pilot project for CO2 capture and storage at Lacq, which illustrates its commitment to the fight against global climate change.
In reaffirming the priority of safety and the environment and by building on its investment discipline, its high-quality portfolio and its recognized expertise, TOTAL is confident in its ability to pursue its strategy of profitable and responsible growth to create value for all of its stakeholders.
Outlookwith 2010.
In the Upstream segment, 2010 production is expected to increase thanks tothree major discoveries in Azerbaijan, Bolivia and French Guiana were the ramp-up on projects started upfirst results of the Group’s bolder exploration strategy. The year 2011 also witnessed the successful start-up of the Pazflor deep-offshore platform in 2009.Angolan waters, a project operated by TOTAL intends to continue to build on its large and diversified portfolio, its recognizedthat illustrates the Group’s expertise in the development of major projects. Five new major projects, including the Ichthys LNG project management and cost control. Followingin Australia (TOTAL, 24%), were also launched, in order to secure growth in the launchyears to come. Still in the Upstream segment, 2011 also saw the announcement of the Surmont Phase IIacquisition 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 in January 2010, TOTAL expects to launch several other major projects, including CLOV in Angola, Laggan/Tormoreits entry into the Utica shale gas and condensates deposit in the United Kingdom,States. The Group continued to extend its oil and Ofon IIgas acreage by acquiring stakes in promising exploration areas, such as the pre-salt blocks in the Kwanza basin in Angola, and Eginaby acquiring stakes in Nigeria.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 Group plans to continue to adaptcompetitive performance of its activities, scaling down its exposure to mature zones, mainly Europe, and bolstering its presence (1) | Based on TOTAL’s “European Refining Margin Indicator” (ERMI). |
(2) | Net-debt-to-equity ratio = net debt (i.e., the sum of current borrowings, other current financial liabilities and non-current financial debt, net of current financial assets, hedging instruments on non-current financial debt and cash and cash equivalents) divided by the sum of shareholders’ equity and non-controlling interests after expected dividends payable. |
(3) | Total Recordable Injury Rate. |
in mature areashigh-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 reinforce its portfoliothe petrochemicals platform in growing markets, notably withNormandy, 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. 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 announced in October 2011. The deployment of this project led to organizational changes on January 1, 2012, with the creation of: a Refining & Chemicals segment, a large 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€776 million, up 9% compared to 2010, with the aim of, in particular, the continued improvement of the Group’s technological expertise in the development of oil and gas resources and the benefit fromdevelopment of solar, biomass, carbon capture and storage technologies in order to contribute to changes in the global energy mix. Finally, in 2011, TOTAL reasserted the priority on safety and the environment as part of its operations throughout its business. For all of its projects conducted in a large number of countries, the Group puts an emphasis on corporate social responsibility (CSR) challenges and the development of the local economies. Outlook In 2012, TOTAL intends to consolidate its drivers for growth and enhance the priority given to safety, reliability and acceptability of its operations. The 2012 net investment budget is $20 billion (approximately€14.3 billion(1)). TOTAL intends to continue 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€17.1 billion). Capital expenditures will mostly be focused on the Upstream segment with an allocation of $20 billion (approximately€14.3 billion), or more than 80% of the Group’s organic capital expenditure budget. About 30% of the investment in the Upstream segment is 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 improve competitive performance, the main projects in the Refining & Chemicals segment in 2012 will be the upgrading of the Normandy 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 maintenance and safety of its facilities a top priority. The Group also confirms its commitment with respect to R&D with a budget increasing to about $1.2 billion (approximately€857 million) in 2012. In the Upstream segment, TOTAL will deploy its strategy intended to speed up growth of its production, while improving the profitability of its portfolio of assets. The year 2012 should see the launch of numerous projects. In 2012, TOTAL plans to bring eight new major projects on-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, Islay in the UK North Sea, Angola LNG in Angola, Bongkot South in Thailand, Halfaya in Iraq, Sulige in China and Kashagan in Kazakhstan. The Group will also continue to evaluate numerous other projects, in particular in Western Africa, Russia and Canada. The anticipated launch of these projects during the course of the next two years should improve visibility on growth in output after 2015. With an exploration budget that stands at $2.5 billion (approximately€1.8 billion), up 20% compared to 2011, the Group will continue to pursue an ambitious and diversified strategy. (1) | All euro figures in this section converted at a rate of $1.40/€. |
In the Downstream sector, with a new organization that will allow it to take up the challenges specific to each activity of that sector, the Group should start to reap the first benefits of an integrated Refining & Chemicals segment and 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 new ethane crackerpolyethylene production unit in Qatar. The Group is continuing to pursue its growth policy in 2010 with an investment budget of approximately€13 billion(1), relatively stable compared to 2009; 80% ofQatar and the investments will be dedicated to the Upstream segment. In addition, TOTAL intends to divest non-strategic assets, in particular through the progressive sale of its shares in Sanofi-Aventis and a project to sell Mapa-Spontex, a subsidiary in its Specialty chemicals sector. Based on this, the Group maintains its net-debt-to-equity ratio objective of around 25-to-30%. TOTAL is confident in its ability to maintain its dividend policy.completion
Since the beginning of the first quarter 2010,step of the priceexpansion of Brent has tradedits 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, while maintaining a target for the net-debt-to-equity ratio of between $70/b20-30% and $80/b and natural gas prices have recovered somewhat. The environment for refining and petrochemicals remains difficult.a dividend policy based on an average pay-out ratio of 50% of adjusted fully-diluted earnings per share(1).
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 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.
1. | Including net investments in equity affiliates and non-consolidated companies, excluding acquisitions, based on€1 = $1.40 for 2010. |
The assessment of critical accounting policies below is not meant to be an all-inclusive discussion of the uncertainties in financial results that can occur from the application of the full range of the Company’s accounting policies. Materially different financial results could occur in the application of other accounting policies as well. Likewise, materially different results can occur upon the adoption of new accounting standards promulgated by the various rule-making bodies. Successful efforts method of oil and gas accounting The Group follows the successful efforts method of accounting for its oil and gas activities. The Group’s oil and gas reserves are estimated by the Group’s petroleum engineers in accordance with industry standards and SEC regulations. In December 2008, the SEC published a revised set of rules for the estimation of reserves. These revised rules were used for the 2009 year-end estimation of reserves.reserves beginning in 2009. Proved oil and gas reserves are those quantities of oil and gas, which, by analysis of geoscience and engineering data, can be estimated with reasonable certainty to be economically producible from a given date forward, from known reservoirs, and under existing economic conditions, operating methods, and government regulations, prior to the time at which contracts providing the right to operate expire, unless evidence indicates that renewal is reasonably certain, regardless of whether deterministic or probabilistic (1) | For the adjusted fully-diluted earnings per share, see the Consolidated Financial Statements included elsewhere herein, Note 4) Business segment information — A) Information by business segment. |
methods are used for the estimation. These estimates do not include probable or possible reserves. Estimated oil 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 20092011 amounted to€307315 million and the Company’s contributions to pension plans were€126347 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, 2009,2011, were€1,0451,713 million compared to€9531,170 million for 2008.2010. The increase in unrecognized actuarial losses is explained by actuarial losses due to a decrease in discount rates in 2009 partially offset by an increase2011 and due to a decrease in the value of plan assets.assets. As explained above, pension accounting principles allow that such actuarial losses be deferred and amortized over future periods, in the Company’s case a period of fifteen years. While theThe Company has not completed its calculations for 2010, it is considering an increaseda decreased weighted-average expected rate of return on pension plan assets of 5.35% for the year (6.39%2012 compared to the 20092011 rate of 6.14%), due to a change in the pension assets allocation as of December 31, 2009, that was offset by a decrease in discount rates in 2009.5.90%. 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€5862 million decrease or increase, respectively, in the 20092011 net periodic pension cost. The estimated impact on expensenet periodic pension cost of the amortization of the unrecognized actuarial losses of pension benefits of€1,0451,713 million as of December 31, 2009,2011, is€58102 million for 2010,2012, compared to the actual impact of€5046 million 2009.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 2007-2009
RESULTS 2009-2011 | | | | | | | | | | | | | As of and for the year ended December 31, (M€, except per share data) | | 2011 | | | 2010 | | | 2009 | | Non-Group sales | | | 184,693 | | | | 159,269 | | | | 131,327 | | Net income (Group share) | | | 12,276 | | | | 10,571 | | | | 8,447 | | Diluted earnings per share | | | 5.44 | | | | 4.71 | | | | 3.78 | |
| | | | | | | As of and for the year ended December 31, (M€, except per share data) | | 2009 | | 2008 | | 2007 | Non-Group sales | | 131,327 | | 179,976 | | 158,752 | Net income (Group share) | | 8,447 | | 10,590 | | 13,181 | Diluted earnings per share | | 3.78 | | 4.71 | | 5.80 |
Group Results 2011 vs. 2010 The year 2011 witnessed a number of geopolitical events that put pressure on market supplies. Despite the economic slowdown, demand for oil products continued to rise, fueled by the growth of emerging markets. Pressure on supply, plus rising demand, resulted in a sharp increase in the price of crude oil. In the Upstream segment, the 2011 oil market environment was marked by a 40% increase in the average Brent price to $111.3/b from $79.5/b in 2010. In 2011, TOTAL’s average liquids price realization(1) increased by 38% to $105.0/b from $76.3/b in 2010, in line with the increase in the average Brent price of oil. TOTAL’s average natural gas price realization(1) increased by 27% to $6.53/MBtu in 2011 from $5.15/MBtu in 2010. The average euro-dollar exchange rate was 1.39 $/€ in 2011 compared to 1.33 $/€ in 2010. In the Downstream segment, the Group’s European Refining Margin Indicator (ERMI) fell to $17.4/t in 2011 from $27.4/t in 2010. Despite the gradual reduction of refining capacity, the overcapacity that has existed in the European refining market since 2009 vs. 2008continued into 2011, due to low demand in Europe. In the first half of 2011, the Chemicals segment enjoyed a globally favorable environment, which has since deteriorated. In the second half of the year, Petrochemicals and Specialty Chemicals saw their margins shrink due to the drop in demand caused by the economic slowdown. Consolidated sales of TOTAL were€184.7 billion in 2011, an increase of 16% from€159.3 billion in 2010, as a result of an increase in non-Group sales in the Upstream, Downstream and Chemicals segments of 26%, 15% and 11%, respectively. Net income (Group share) in 2011 increased by 16% to€12,276 million from€10,571 million in 2010, mainly due to the impact of the increase in hydrocarbon prices on the Upstream segment’s results. The after-tax inventory valuation effect (as defined below under “— Business Segment Reporting”) had a positive impact on net income (Group share) of€834 million in 2011 and a positive impact of€748 million in 2010, in each case essentially due to the increase in oil prices. As from January 1, 2011, the Group accounts for changes in fair value of trading inventories and storage contracts (as defined below under “— Business Segment Reporting”). Changes in fair value of these items had a positive impact on net income (Group share) of€32 million in 2011. Special items had a negative impact on net income (Group share) of€14 million in 2011, comprised mainly of€1,014 million of impairments (essentially impairments on European refining and renewable energy assets) and€1,538 million of gains on asset sales. Special items had a negative impact on net income (Group share) of€384 million in 2010, comprised essentially of asset impairments that had a negative impact of€1,224 million (essentially impairments on European refining assets) and gains on asset sales that had a positive impact of€1,046 million. Effective July 1, 2010, the Group no longer accounts for its interest in Sanofi as an equity affiliate, but treats such interest as a financial asset available for sale in the line “Other investments” of the balance sheet. In 2010, the Group’s share of adjustment items related to Sanofi had a negative impact on net income (Group share) of€81 million. In 2011, income taxes amounted to€14,073 million, an increase of 38% compared to€10,228 in 2010, primarily as a result of the increase in taxable income. The increase in the effective tax rate from 49% in 2010 to 53% in 2011 was mainly due to an increase in the portion of the Group’s income before tax attributable to entities with a local tax rate much higher than the French tax rate (36.10%). The portion of the Upstream income before tax represented 89% in 2011, unchanged from 2010. The Group did not buy back shares in 2011. The number of fully-diluted shares at December 31, 2011, was 2,263.8 million compared to 2,249.3 million at December 31, 2010. Fully-diluted earnings per share, based on 2,257 million weighted-average shares, was€5.44 in 2011 compared to€4.71 in 2010, an increase of 15%. (1) | Consolidated subsidiaries, excluding fixed margin and buyback contracts. |
Group Results 2010 vs. 2009 In 2009,2010, the oil and gas market environment was characterized by a sharp decline in theincreased demand for oil and natural gas and refined products. Following a significant decrease in the fourth quarter of 2008, crudeCrude oil prices reboundedwere relatively stable during 2009 to2010, with an average Brent oil price of $79.5/b, an increase of 29% compared to $61.7/b which represents a decrease of approximately 37% comparedin 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 oil price of $97.30/boil. TOTAL’s average natural gas price realization(1) decreased to $5.15/MBtu in 2008. Natural gas spot prices remained depressed throughout 2009, with an average of2010 from $5.17/Mbtu, which represents a decrease of 30% compared to $7.38/MbtuMBtu in 2008.2009. The decrease in oil and gas prices was partially offset by the slight strengthening of the dollar comparative to the euro: the average euro-dollar exchange rate was $1.39/1.33 $/€ on average in 2010 compared to 1.39 $/€ in 2009 compared to $1.47/€ in 2008. Comparing 2009 to 2008, TOTAL’s average realized liquids price decreased by 36% and average realized natural gas price decreased by 30%.2009. Refining margins fellrebounded in 2009 to2010 from historically low levels with TOTAL’s European Refining Margin Indicator (ERMI) falling by 65%in 2009. For the full year 2010, the Group’s ERMI was $27.4/t, an increase of 54% compared to $17.8/t compared to $51.1/t in 2008. ERMI is a new indicator, reported by TOTAL since January2009. For the full year 2010, intended to represent the margin after variable costs for a theoretical complex refinery located around Rotterdam in Northern Europe that processes a mix of crude oil and other inputs commonly supplied to this region to produce and market the main refined products at prevailing prices in this region. The indicator margin may not be representative of the actual margins achieved by TOTAL in any period because of TOTAL’s particular refinery configurations, product mix effects or other company-specific operating conditions. TOTAL’s refining margin indicator reported in previous quarters was TRCV. For comparative purposes, TRCV fell by 61% to $14.8/t in 2009, compared to $37.8/t in 2008. TRCV was discontinued effective in the first quarter 2010.
In the Chemicals segment despitebenefited from a strong demand for polymers in China, the environment was affected by low margins and a sharp droprebound in demand for polymers and specialty chemicalsmargins in OECD markets.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, a decrease of 27% from€180 billion in 2008, as a result of a declinean increase in non-Group sales in the Upstream, Downstream and Chemicals segments of 34%15%, 26%23% and 27%19%, respectively. TOTAL’sReported net income (Group share) decreasedin 2010 increased by 25% to€10,571 million from€8,447 million in 2009, from€10,590 million in 2008. The 20% decrease in net income (Group share) in 2009 compared to 2008 was mainly due to the negative impact of lowerincrease in hydrocarbon prices and refining margins (-€6.8 billion). Other factors contributing toproduction, as well as a decreaserebound in net income (Group share) in 2009 compared to 2008
included special items (-€0.1 billion). These negative impacts were partially offset by the positive impacts of: theChemicals segment. The after-tax impact of prices on inventory valuation accounted for in the Downstream and Chemicals segments (+had a positive impact on net income (Group share) of€4.0 billion);748 million in 2010 and a positive impact of€1,533 million in 2009, in each case due to the increase in oil prices. For a discussion of the impact of prices on inventory valuation in the Downstream and Chemicals segments see “— Business Segment Reporting” below. Special items had a negative impact on net income (Group share) of€384 million in 2010, comprised essentially of asset impairments that had a negative impact of€1,224 million and gains on asset sales that had a positive impact of€1,046 million. Special items had a negative impact of€570 million in 2009. 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. The Group’s equity share of adjustments (concerning amortization and impairment of intangibles adjustment items
related to the Sanofi-Aventis merger) and, from 2009, selected items related to Sanofi-Aventis (+Sanofi had a negative impact on net income (Group share) of€0.1 billion);81 million in 2010 (six months) and a stronger dollar (+negative impact of€0.5 billion)300 million in 2009 (full year). In 2009,2010, income taxes amounted to€7,75110,228 million, a decreasean increase of 45%32% compared to€14,1467,751 in 2008,2009, primarily as a result of the declineincrease in taxable income. The increase in the effective tax rate from 47% in 2009 to 49% in 2010 was mainly due to an increase in the portion of the Group income before tax attributable to entities with a local tax rate much higher than the French tax rate (34.43%). The portion of the Upstream income before tax represented 89% in 2010 compared with 82% in 2009, with a corresponding impact on the Group effective tax rate. The Group did not buy back shares in 2009.2010. The number of fully-diluted shares at December 31, 2009,2010, was 2,243.72,249.3 million compared to 2,235.32,243.7 million at December 31, 2008.2009. Fully-diluted earnings per share, based on 2,237.32,244.5 million weighted-average shares, was€3.784.71 in 2010, compared to€4.713.78 in 2008, a decrease2009, an increase of 20%25%. Group Results 2008 vs. 2007
Unprecedented volatility marked the 2008 oil market environment. In the first part of the year, the price of Brent crude climbed rapidly toward $150/b. In the second part of the year, the global economy suffered 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 billion in 2008 from€158.8 billion in 2007.
TOTAL’s net income (Group share) was€10,590 million in 2008 compared to€13,181 million in 2007. The 20% decrease in net income in 2008 compared to 2007 was mainly due to the negative after-tax impact of prices on inventory valuation (-€3.8 billion), due to the sharp drop in oil prices in the last quarter of 2008. Other factors contributing to the decrease in net income in 2008
compared to 2007 consisted mainly of: the weaker dollar (-€0.8 billion); special items (-€0.5 billion); higher Upstream costs (-€0.5 billion); lower production (-€0.5 billion); less favorable results from U.S. refining, mainly due to a less favorable business environment and hurricanes (-€0.2 billion); a less favorable environment in the Chemicals business (-€0.2 billion); the Group’s equity share of the amortization of intangibles related to the Sanofi-Aventis merger (-€0.1 billion); 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 billion). These negative impacts were partially offset by the positive impacts of higher hydrocarbon prices (+€3.5 billion) and a more favorable Downstream business environment (+€0.6 billion).
In 2008, the Group bought back 27.6 million of its shares(1)for€1,339 million. The number of fully-diluted shares at December 31, 2008, was 2,235 million compared to 2,265 million at December 31, 2007.
Diluted earnings per share, based on 2,247 million fully-diluted weighted-average shares, decreased by 19% to€4.71 in 2008 from€5.80 in 2007.
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, inventories are valued at the lastcost of inventory is based on the historic cost of acquisition or productionmanufacture rather than the current replacement cost. In volatile energy markets, this can have a significant distorting effect on the reported income. Accordingly, the segment measureadjusted results of profitability for the Downstream segment and Chemicals segments is based on asegment are presented according to the replacement cost method in order to excludefacilitate the comparability of the Group’s results (1) | Consolidated subsidiaries, excluding fixed margin and buyback contracts. |
with those of its competitors and to help illustrate the operating performance of these segments excluding the impact of oil price changes on the replacement of inventories, as
1. | Includes 2.8 million shares purchased to cover restricted share grants pursuant toinventories. In the decision of the Board on September 9, 2008. |
management believes such measure reflects more accurately the operating performance of these segments. In this replacement cost method, which is conceptually close toapproximates the LIFO (Last-In, First-Out) method, decreasesthe variation of inventory values in inventories are valued using the monthly averagestatement of income is, depending on the nature of the acquisitioninventory, determined using either the month-end prices differential between one period and another or production costs for the month in question rather than the costaverage prices of the oldest articles in the inventories.period. The inventory valuation effect is the difference between the results according tounder the FIFO method and this replacement cost method. Whenmethods.
As from January 1, 2011, the replacement cost is higher thaneffect of changes in fair value presented as an adjustment item reflects, for trading inventories and storage contracts, differences between internal measures of performance used by TOTAL’s management and the costaccounting for these transactions under IFRS. IFRS requires that trading inventories be recorded at their fair value using period-end spot prices. In order to best reflect the management of economic exposure through derivative transactions, internal indicators used to measure performance include valuations of trading inventories recorded at their fair value based on forward prices. Furthermore, TOTAL, in its trading activities, enters into storage contracts, the oldest articlesfuture effects of which are recorded at fair value in the inventories (i.e., positive inventory valuation effect), a provisionGroup’s internal economic performance. IFRS, by requiring accounting for oil price changes instorage contracts on an accrual basis, precludes recognition of this fair value effect. Until June 30, 2010, the adjusted results is established and affects operating expenses. When the replacement cost is lower than the cost of the oldest articles in the inventories (i.e., negative inventory valuation effect), the provision for oil price changes is reversed. The Group also adjustsadjusted for its equity share of adjustments (concerning amortization and impairment of intangibles related to the Sanofi-Aventis merger) and, from 2009, selectedadjustment items related to Sanofi-Aventis.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, and Sanofi-Aventis related 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. The Group measures performance at the segment level on the basis of net operating income and adjusted net operating income. Net operating income comprises operating income of the relevant segment after deducting the amortization and the depreciation of intangible assets other than leasehold rights, translation adjustments and gains or losses on the sale of assets, as well as all other income and expenses related to capital employed (dividends from non-consolidated companies, income from equity affiliates and capitalized interest expenses), and after income taxes applicable to the above. The income and expenses not included in net operating income butthat are included in net income are interest expenses related to long-term liabilities net financial debt only,of interest earned on cash and cash equivalents, after applicable income taxes (net cost of net debt and minoritynon-controlling interests). Adjusted net operating income excludes the effect of the adjustments (special items and the inventory valuation effect and Sanofi-Aventis related items)effect) described above. For further discussion onof the calculation of net operating income and the calculation of return on average capital employed (ROACE)(1), see Note 2 to the Consolidated Financial Statements.
Upstream results | (M€) | | 2009 | | 2008 | | 2007 | | | 2011 | | 2010 | | 2009 | | Non-Group sales | | 16,072 | | | 24,256 | | | 19,706 | | | | 23,298 | | | | 18,527 | | | | 16,072 | | Operating income(a) | | 12,858 | | | 23,468 | | | 19,503 | | | | 22,444 | | | | 17,450 | | | | 12,858 | | Equity in income (loss) of affiliates and other items | | 846 | | | 1,541 | | | 1,330 | | | | 1,596 | | | | 1,533 | | | | 846 | | Tax on net operating income | | (7,486 | ) | | (14,563 | ) | | (11,996 | ) | | | (13,506 | ) | | | (10,131 | ) | | | (7,486 | ) | Net operating income(a) | | 6,218 | | | 10,446 | | | 8,837 | | | | 10,534 | | | | 8,852 | | | | 6,218 | | Adjustments affecting net operating income | | 164 | | | 278 | | | 12 | | | | (129 | ) | | | (255 | ) | | | 164 | | Adjusted net operating income(b) | | 6,382 | | | 10,724 | | | 8,849 | | | | 10,405 | | | | 8,597 | | | | 6,382 | | Investments | | 9,855 | | | 10,017 | | | 8,882 | | | | 21,689 | | | | 13,208 | | | | 9,855 | | Divestments | | 398 | | | 1,130 | | | 751 | | | | 2,656 | | | | 2,067 | | | | 398 | | | ROACE | | 18% | | | 36% | | | 34% | | | | 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. |
2009 vs. 2008
Upstream segment sales (excluding sales to other segments) were down 34% to€16,072 million in 2009 compared to€24,256 million in 2008, reflecting essentially lower average hydrocarbon prices and a decrease in production, which were partially offset by the impact of the appreciation of the dollar compared to the euro.
In 2009, TOTAL’s average liquids price realization(2)decreased 36% to $58.1/b from $91.1/b in 2008, in line with the decrease in the average Brent price of oil, which was $61.7/b in 2009 compared to $97.3/b in 2008. TOTAL’s average natural gas price realization(2) decreased 30% to $5.17/MBtu in 2009 from $7.38/MBtu in 2008.
1.(1) | ROACE = adjusted net operating income divided by average capital employed. |
2. | Consolidated subsidiaries, excluding fixed margin and buyback contracts. |
For2011 vs. 2010
Upstream segment sales (excluding sales to other segments) increased by 26% to€23,298 million in 2011 from€18,527 million in 2010, reflecting essentially the full year 2009, oilimpact of higher hydrocarbon prices. Oil and gas production averaged 2,281 kboe/d, compared to 2,3412,346 kboe/d in 2008.2011, compared to 2,378 kboe/d in 2010. This 2.6%1.3% decrease was due mainlyessentially to the negative impactsresult of OPEC reductions and lower gas demand (-3%), changes in the portfolio, essentially in Venezuela and Libya (-2%), and disruptions in Nigeria related to security issues (-1%), partially offset by the positive impact of ramp-ups and start-ups of new fieldsnormal decline, net of the normal declineproduction ramp-ups on existing fields (+2%new projects (-1.5%), security conditions, mainly in Libya (-1.5%) and the price effect(1) (-2%), partially offset by changes in the portfolio (+1.5%). Excluding2.5%; integrating the net share of Novatek production and the impact of the sale of interests in CEPSA) and the end of OPEC reductions production was stable compared to 2008.(+1%). Proved reserves based on the revisedSEC rules published by the SEC in December 2008 were 10,48311,423 Mboe at December 31, 20092011 (Brent at $59.91/$110.96/b), compared to 10,45810,695 Mboe at December 31, 2008. At2010 (Brent at $79.02/b). Based on the 20092011 average rate of production, the reserve life is more than twelvethirteen years. See “Item 4. Information on the Company — Exploration & Production — Reserves” for a discussion of proved reserves and “Supplemental Oil and Gas Information (Unaudited)” contained elsewhere herein for additional information on proved reserves, including tables showing changes in proved reserves by region. Upstream net operating income in 20092011 amounted to€6,21810,534 million (for 2008,2010,€10,4468,852 million) from operating income of€12,85822,444 million (for 2008,2010,€23,46817,450 million), with the difference between net operating income and operating income resulting primarily from taxes on net operating income of€7,48613,506 million ((for 2010,€14,563 million in 2008)10,131 million), partially offset by income from equity affiliates and other items of€8461,596 million ((for 2010,€1,541 million1,533 million). The increase in 2008).net operating income in 2011 compared to 2010 was due primarily to the impact of higher hydrocarbon prices. Over the full year 2009, adjustedAdjusted net operating income for the Upstream segment was€6,38210,405 million in 2011 compared to€10,7248,597 million in 2008, a decrease2010, an increase of 40%21%, essentially due to lowerthe impact of higher hydrocarbon prices (-€4.6 billion), partially offset by the positive impact of a slightly stronger dollar compared to the euro (+€0.4 billion).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) (previously FAS69) were $15.4/$18.9/boe(3) in 2011, compared to $16.6/boe in 2009, stable compared2010, mainly due to 2008, with a decrease of 8% in operating expenses per barrel offsetting an increase in
depreciation, depletion and amortization (DD&A) charges related notably to the start-up of new projects.projects and increased operating expenses per barrel. Adjusted net operating income for the Upstream segment excludes special items. In 2009,2011, the exclusion of special items (comprised principally of asset impairments and other elements) had a positivenegative impact of€164129 million on adjusted net operating income for the Upstream segment compared toand a positivenegative impact of€278255 million in 2008 (comprised2010, in both cases comprised principally of ancapital gains on asset impairment of€171 million on the Joslyn project and the net impact of contract renegotiations of€106 million).sales partially offset by asset impairments. The Upstream segment’s total capital expenditures decreasedincreased by 2%64% to€9,85521,689 million in 20092011 from€10,01713,208 million in 2008. The capital2010. Capital expenditures excluding acquisitions in 20092011 mainly included projects in the following projects: Kashagan in Kazakhstan; Pazflor,countries: Angola, LNG and Tombua Landana in Angola; Akpo, Usan and Ofon II in Nigeria; Ekofisk in Norway; the Mahakam zone in Indonesia; the Alwyn zone inNigeria, Norway, Australia, Kazakhstan, the United Kingdom; Moho Bilondo inKingdom, Canada, Indonesia, Gabon, the Republic of the Congo;Congo and Anguille in Gabon.the United States. ROACE for the Upstream segment decreased to 18.2%20% in 20092011 from 35.9%21% in 2008.2010. The decrease was mainly due to the adjusted net operating income having decreased, principally due to lower hydrocarbon prices.increase in capital employed in 2011. 20082010 vs. 20072009
Upstream segment sales (excluding sales to other segments) were up 23%increased by 15% to€24,25618,527 million in 20082010 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€19,706 million 2,281 kboe/d in 2007, reflecting higher average hydrocarbon prices, which more than offset2009. This 4.3% increase was essentially the impactsresult of production ramp-ups on new projects, net of the decrease of the dollar compared to the euronormal decline, and a decreaselower level of turnarounds (+3%), changes in production. TOTAL’s average liquids price realization(3) in 2008 increased 32% to $91.1/b from $68.9/b in 2007, in line with the portfolio (+2%), lower OPEC reductions and an increase in the average Brent price of oil, which was $97.3/bgas demand (+1.5%) and improved security conditions in 2008 compared to $72.4/b in 2007. TOTAL’s average natural gas price realization(3) 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 million compared to€8,849 million in 2007. The increase in adjusted net operating income was mainly due to the positive impacts of the price of hydrocarbonsNigeria (+€3.5 billion)1%), partially offset by the negative impactsprice 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 the weaker dollar (-€0.6 billion), lower production, (-€0.5 billion) and higher production costs (-€0.5 billion).reserve life was more than twelve years. The exclusion of special items (which in 2008 comprised principally an asset impairment of€171 millionSee “Item 4. Information on the Joslyn projectCompany — Exploration & Production — Reserves” for a discussion of proved reserves and the net impact of contract renegotiations of€106 million) had a positive impact of€278 million“Supplemental Oil and Gas Information (Unaudited)” contained elsewhere herein for additional information on adjusted net operating income for the Upstream segmentproved reserves, including tables showing changes in 2008 compared to a positive impact of€12 million in 2007 (comprised principally of asset impairments of€93 million largely offsetproved reserves by capital gains of€89 million).region.
1.(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.(2) | FASB Accounting Standards Codification Topic 932, Extractive industries — Oil and Gas. |
3.(3) | Consolidated subsidiaries, excluding fixed margin and buyback contracts.Excluding IAS 36 (impairment of assets). |
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 in 2010 amounted to€10,4468,852 million (for 2007,2009,€8,8376,218 million) from operating income of€23,46817,450 million (for 2007,2009,€19,50312,858 million), with the difference between net operating income and operating income resulting primarily from taxes on net operating income of€14,56310,131 million ((for 2009,€11,996 million in 2007)7,486 million), partially offset by income from equity affiliates and other items of€1,5411,533 million ((for 2009,€1,330846 million). The increase in net operating income in 2010 compared to 2009 was due primarily to the impact of higher hydrocarbon prices and production growth.
Over the full year 2010, adjusted net operating income for the Upstream segment was€8,597 million compared to€6,382 million in 2007)2009, an increase of 35%, essentially due to hydrocarbon prices (+€2.3 billion). Oil and gas production Technical costs for consolidated subsidiaries, in 2008 averaged 2,341 kboe/daccordance with ASC 932 were $16.6/boe in 2010, compared to 2,391 kboe/d$15.4/boe in 2007. This 2% decrease was2009, mainly due to the negative impacts of the price effect (-2%), unscheduled shutdowns (-2.5%, mainly on the Elgin Franklin field in February, the Brucedepreciation, depletion and Alwyn fields in the summer and the Al Jurf field from Aprilamortization (DD&A) charges related notably to the endstart-up of December 2008, as described in Item 4new projects and increased operating expenses per barrel.
Adjusted net operating income for the Upstream segment excludes special items. In 2010, the exclusion of this Annual Report) and changes in the portfolio (-1%)special items (comprised principally of capital gains on asset sales partially offset by asset impairments) had a negative impact of€255 million on adjusted net operating income for the Upstream segment compared to a positive impact of underlying production growth (+3.5%, primarily€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 production ramp-ups and start-ups of major TOTAL-operated€9,855 million in 2009. The capital expenditures in 2010 mainly included 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%.
The Group’s proved reserves at December 31, 2008, remained steady at 10,458 Mboe compared to 10,449 Mboe at December 31, 2007. At the 2008 average rate of production, these reserves represent approximately 12 years of production.
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 capital expenditures of the Upstream segment increased by 13% to€10,017 million in 2008 from€8,882 million in 2007. In 2008, capital expenditures mainly included the following projects: Kashagan in Kazakhstan; Akpo, Usan and OML 58 in Nigeria; Pazflor,countries: Angola, LNG and Tombua Landana in Angola; Ekofisk in Norway; the Mahakam zone in Indonesia; the Alwyn zone in the United Kingdom; Moho Bilondo inStates, Nigeria, Canada, Norway, Kazakhstan, Australia, the United Kingdom, Indonesia, the Republic of the Congo, Libya, Gabon and AnguilleThailand.
ROACE for the Upstream segment increased to 21% in Gabon.2010 from 18% in 2009. The increase was mainly due to the adjusted net operating income having increased, principally due to increased hydrocarbon prices and production.
Downstream results | (M€) | | 2009 | | 2008 | | 2007 | | | 2011 | | 2010 | | 2009 | | Non-Group sales | | 100,518 | | | 135,524 | | | 119,212 | | | | 141,907 | | | | 123,245 | | | | 100,518 | | Operating income(a) | | 2,237 | | | 826 | | | 4,824 | | | | 1,694 | | | | 982 | | | | 2,237 | | Equity in income (loss) of affiliates and other items | | 169 | | | (158 | ) | | 284 | | | | 401 | | | | 141 | | | | 169 | | Tax on net operating income | | (633 | ) | | (143 | ) | | (1,482 | ) | | | (409 | ) | | | (201 | ) | | | (633 | ) | Net operating income(a) | | 1,773 | | | 525 | | | 3,626 | | | | 1,686 | | | | 922 | | | | 1,773 | | Adjustments affecting net operating income | | (820 | ) | | 2,044 | | | (1,091 | ) | | | (603 | ) | | | 246 | | | | (820 | ) | Adjusted net operating income(b) | | 953 | | | 2,569 | | | 2,535 | | | | 1,083 | | | | 1,168 | | | | 953 | | Investments | | 2,771 | | | 2,418 | | | 1,875 | | | | 1,870 | | | | 2,343 | | | | 2,771 | | Divestments | | 133 | | | 216 | | | 394 | | | | 3,235 | | | | 499 | | | | 133 | | | ROACE | | 7% | | | 20% | | | 21% | | | | 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. |
20092011 vs. 20082010
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) were€100,518141,907 million in 2009, a decrease of 26% from2011 compared to€135,524123,245 million in 2008.2010, an increase of 15% essentially due to the impact of higher hydrocarbon prices. Refined product sales averaged 3,616(including trading operations) were 3,639 kb/d in 2009, decreasing slightly from 3,6582011, a decrease of 4% compared to 3,776 kb/d in 2008.2010. Refinery throughput in 20092011 was 2,1511,863 kb/d, a 9%7% decrease compared to 2,3622,009 kb/d in 2008.2010 essentially due to the sale of the Group’s interest in CEPSA and a higher level of major turnarounds than in 2010. In 2011, major turnarounds took place in the Antwerp, Grandpuits, Leuna, Lindsey and Port Arthur refineries. For the full year 2009,2011, the refinery utilization rate based on crude throughput was 78% (83% for crude and other feedstock) compared to 88%73% in 2008 (91%2010 (77% for crude and other feedstock), reflecting. In 2010, the voluntary throughput reductionsutilization rate was impacted by the shutdown of the Dunkirk refinery and a distillation unit at the Normandy refinery as well as impacts from strikes in the Group’s refineries. Five refineries had scheduled turnarounds for maintenance in 2009 compared to six in 2008. Turnaround activity in 2010 is expected to be lower than in 2009.France. In 2009,2011, Downstream net operating income increased to€1,7731,686 million (for 2008,2010,€525922 million) from operating income of€2,2371,694 million (for 2008,2010,€826982 million), with the difference between net operating income and operating income resulting primarily from taxes on net operating income of€633409 million (for 2008,2010,€143201 million), partially offset by income from equity affiliates and other items of€169401 million (for 2008, loss of2010,€158141 million). The increase in net operating income in 2011 compared to 2010 was due primarily to the impact of higher hydrocarbon prices, gains on asset sales and lower impairment charges.
The Downstream segment’s adjusted net operating income in 2009 decreased 63% to2011 was€9531,083 million compared to€2,5691,168 million in 2008, reflecting2010. The decrease was essentially due to the sharp decrease innegative impact of the demand for refined products anddeterioration in refining margins.margins in 2011. Adjusted net operating income for the Downstream segment excludes any after-tax inventory valuation effect and special items. The adjustment for the inventory valuation effect had a negative impact on Downstream adjusted net operating income in 2011 of€1,285859 million compared to a negative impact of€640 million in 2010. The exclusion of special items (comprised essentially of impairments on European refining assets (as described below), partially offset by gains on asset sales) in 2011 had a positive impact of€1,971256 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 2008.operating income and€478 million in net income. These elements have been treated as adjustment items. Investments by the Downstream segment were€1,870 million in 2011, a decrease of 20% compared to€2,343 million in 2010. Divestments by the Downstream segment were€3,235 million in 2011, comprised essentially of the Group’s stake in CEPSA and certain distribution activities in the United Kingdom, compared to€499 million in 2010. ROACE for the Downstream segment was 7% in 2011 compared to 8% in 2010. 2010 vs. 2009 For the full year 2010, the Group’s ERMI was $27.4/t, an increase of 54% compared to 2009. Downstream segment sales (excluding sales to other segments) were€123,245 million in 2010, an increase of 23% from€100,518 million in 2009. Refined product sales (including trading operations) were 3,776 kb/d in 2010, an increase of 4% compared to 3,616 kb/d in 2009. Refinery throughput in 2010 was 2,009 kb/d, a 7% decrease compared to 2,151 kb/d in 2009. For the full year 2010, the refinery utilization rate based on crude throughput was 73% (77% for crude and other feedstock) compared to 78% in 2009 (83% for crude and other feedstock), reflecting essentially the shutdown of the Dunkirk refinery and a distillation unit at the Normandy refinery as well as impacts from strikes in France. In 2010, the level of scheduled turnarounds for refinery maintenance was low, with turnaround activity expected to increase notably in 2011. In 2010, Downstream net operating income decreased to€922 million (for 2009,€1,773 million) from operating income of€982 million (for 2009,€2,237 million), with the difference between net operating income and operating income resulting primarily from taxes on net operating income of€201 million (for 2009,€633 million), partially offset by income from equity affiliates and other items of€141 million (for 2009,€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) in 2009 had a positive impact of€465 million on the adjusted net operating income. In 2008, The persistence of an unfavorable economic environment for refining, affecting Europe in particular, led the exclusion of special items (relating principallyGroup to restructuring chargesrecognize an impairment in the Downstream segment, essentially on French and UK refining assets, in the fourth quarter 2010 in the amount of€701,192 million in operating income and other special items) had a positive impact of€73913 million on adjustedin net operating income. These elements have been treated as adjustment items. Investments by the Downstream segment were€2,343 million in 2010, compared to€2,771 million in 2009, compared to€2,418 million in 2008.2009. ROACE for the Downstream segment was 6.6%8% in 20092010 compared to 19.9%7% in 2008 due principally to the significant decrease in adjusted net operating income. 2008 vs. 2007
Downstream segment sales (excluding sales to other segments) increased 14% to€135,524 million in 2008 compared to€119,212 million in 2007.
In 2008, refined product sales averaged 3,658 kb/d, down 3% from 3,774 kb/d in 2007. 2008 refinery throughput decreased slightly to 2,362 kb/d from 2,413 kb/d in 2007. The refinery utilization rate for 2008 based on crude throughput was 88% (91% based on crude and other feedstock) compared to 87% (89% based on crude and other feedstock) in 2007. In 2008, six refineries were affected by turnarounds compared to2009.
ten in 2007. The level of refinery turnarounds in 2009 is expected to be comparable to the 2008 level.
For 2008, adjusted net operating income for the Downstream segment increased 1% to€2,569 million compared to€2,535 million in 2007. This result mainly reflects the generally satisfactory environment, with gains in Europe (€0.55 billion) in 2008 offset by losses in U.S. refining (-€0.2 billion) stemming from the negative environment and from hurricanes, as well as benefits recorded from increased productivity and supply optimization, particularly during the fourth quarter of 2008. However, net operating income was negatively affected by a 70% decrease in income from equity affiliates to€77 million in 2008 from€258 million 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 million in 2008 compared to a negative impact of€1,098 million in 2007. In 2008, the exclusion of special items (relating principally to restructuring charges of€70 million and other special items) had a positive impact of€73 million on adjusted net operating income. The exclusion of special items in 2007 had a negative impact of€7 million, with capital gains of€101 million 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.
In 2008, Downstream net operating income decreased to€525 million (for 2007,€3,626 million) from operating income of€826 million (for 2007,€4,824 million), with the difference resulting primarily from taxes on net operating income of€143 million (for 2007,€1,482 million) and from the loss from equity affiliates and other items of€158 million (for 2007, income of€284 million).
Investments by the Downstream segment were€2,418 million in 2008 compared to€1,875 million in 2007.
Chemicals results | (M€) | | 2009 | | 2008 | | 2007 | | | 2011 | | 2010 | | 2009 | | Non-Group sales | | 14,726 | | | 20,150 | | | 19,805 | | | | 19,477 | | | | 17,490 | | | | 14,726 | | Operating income(a) | | 553 | | | (58 | ) | | 1,424 | | | | 658 | | | | 964 | | | | 553 | | Equity in income (loss) of affiliates and other items | | (58 | ) | | (34 | ) | | (11 | ) | | | 471 | | | | 215 | | | | (58 | ) | Tax on net operating income | | (92 | ) | | 76 | | | (426 | ) | | | (225 | ) | | | (267 | ) | | | (92 | ) | Net operating income(a) | | 403 | | | (16 | ) | | 987 | | | | 904 | | | | 912 | | | | 403 | | Adjustments affecting net operating income | | (131 | ) | | 684 | | | (140 | ) | | | (129 | ) | | | (55 | ) | | | (131 | ) | Adjusted net operating income(b) | | 272 | | | 668 | | | 847 | | | | 775 | | | | 857 | | | | 272 | | Investments | | 631 | | | 1,074 | | | 911 | | | | 847 | | | | 641 | | | | 631 | | Divestments | | 47 | | | 53 | | | 83 | | | | 1,164 | | | | 347 | | | | 47 | | | ROACE | | 4% | | | 9% | | | 12% | | | | 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. |
20092011 vs. 20082010
For the full year 2011, Chemicals segment sales, (excludingexcluding intra-Group sales, to other segments) were€14,72619,477 million, in 2009, a decreasean increase of 27% from11% compared to€20,15017,490 million for 2010, reflecting essentially the globally favorable environment in 2008.the first half 2011, which has since deteriorated. In 2009,2011, net operating income for the Chemicals segment was€403904 million (for 2008, a loss of2010,€16912 million) from an operating income of€ 553658 million (for 2008, an operating loss of2010,€58964 million), with the difference between net operating income and operating income resulting primarily from lossesincome from equity affiliates and other items of€58471 million (for 2008,2010, income of€34215 million) andoffset by taxes on net operating income of€92225 million (for 2008,2010, a tax gainloss of€76267 million). The decrease in 2011 in net operating income compared to 2010 was due primarily to the sale of the Group’s stake in CEPSA and a portion of the Resins activities. The adjusted net operating income for the Chemicals segment’ssegment 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 2009 was2011 of€272426 million as compared to€668475 million in 2008, a decrease of 59% that was essentially due to the significantly weaker market conditions for the Base chemicals activity and, to a lesser degree, lower sales and results from the Specialties activity.2010. Adjusted net operating income for the Chemicals segment excludes any after-tax inventory valuation effect and special items. The exclusion of the inventory valuation effect had a negative impact on Chemicals adjusted net operating income of€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€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 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€254 million in 2009, compared to2009. In 2010, the exclusion of special items had a positive impact on Chemicals adjusted net operating income of€504 million in 2008.58 million. In 2009, the exclusion of special items (comprised primarily of asset impairments and other elements) had a positive impact on Chemicals adjusted net operating income of€123 million. In 2008, the exclusion of special items (relating principally to restructuring costs, asset impairment and other elements) had a positive impact of€180 million on adjusted net operating income. Investments by the Chemicals segment decreased to€631 million in 2009 compared to€1,074 million in 2008.
ROACE for the Chemicals segment was 3.8% in 2008 compared to 9.2% in 2008 due principally to the significant decrease in adjusted net operating income.
2008 vs. 2007
Chemicals segment sales (excluding sales to other segments) increased by 2% to€20,150 million in 2008 from€19,805 million in 2007.
Adjusted net operating income for the Chemicals segment decreased by 21% to€668 million in 2008 from€847 million in 2007, due to the negative market environment faced by the Chemicals segment. In the first half 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 positive impact of€504 million on adjusted net operating income for the Chemicals segment in 2008, compared to a negative impact of€201 million in 2007. In 2008, the exclusion of special items (relating principally to restructuring costs, asset impairment and other elements) had a positive impact of€180 million on adjusted net operating income. In 2007, the exclusion of special items (comprised of restructuring charges, asset impairments and other elements) had a positive impact of€61 million on 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.
In 2008, net operating income amounted to a loss of€16 million (for 2007, a gain of€987 million) from an operating loss of€58 million (for 2007, operating income of€1,424 million), with the difference resulting primarily from losses from equity affiliates and other items of€34 million (for 2007,€11 million), and gains on taxes on
net operating income of€76 million (for 2007, a loss of€426 million).
Investments by the Chemicals segment increased to€1,074641 million in 20082010 compared to€911631 million in 2007.2009. ROACE for the Chemicals segment was 12% in 2010 compared to 4% in 2009 due principally to the significant increase in adjusted net operating income.
Liquidity And Capital ResourcesLIQUIDITY AND CAPITAL RESOURCES
| (M€) | | 2009 | | 2008 | | 2007 | | | 2011 | | 2010 | | 2009 | | Cash flow from operating activities | | 12,360 | | | 18,669 | | | 17,686 | | | | 19,536 | | | | 18,493 | | | | 12,360 | | Including (increase) decrease in working capital | | (3,316 | ) | | 2,571 | | | (1,476 | ) | | | (1,739 | ) | | | (496 | ) | | | (3,316 | ) | Cash flow used in investing activities | | (10,268 | ) | | (11,055 | ) | | (10,166 | ) | | | (15,963 | ) | | | (11,957 | ) | | | (10,268 | ) | Total expenditures | | (13,349 | ) | | (13,640 | ) | | (11,722 | ) | | | (24,541 | ) | | | (16,273 | ) | | | (13,349 | ) | Total divestments | | 3,081 | | | 2,585 | | | 1,556 | | | | 8,578 | | | | 4,316 | | | | 3,081 | | Cash flow used in financing activities | | (2,868 | ) | | (793 | ) | | (3,342 | ) | | | (4,309 | ) | | | (3,348 | ) | | | (2,868 | ) | Net increase (decrease) in cash and cash equivalents | | (776 | ) | | 6,821 | | | 4,178 | | | | (736 | ) | | | 3,188 | | | | (776 | ) | Effect of exchange rates | | 117 | | | (488 | ) | | (683 | ) | | | 272 | | | | (361 | ) | | | 117 | | Cash and cash equivalents at the beginning of the period | | 12,321 | | | 5,988 | | | 2,493 | | | | 14,489 | | | | 11,662 | | | | 12,321 | | | Cash and cash equivalents at the end of the period | | 11,662 | | | 12,321 | | | 5,988 | | | | 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 isin 2011 was made up of additions to intangible assets and property, plant and equipment (approximately 73%), with the remainder attributable to equity-method affiliates and to acquisitions of subsidiaries. In the Upstream segment, as described in more detail under “Supplemental Oil and Gas Information (Unaudited) — Costs incurred in oil and gas property acquisition, exploration and development activities”, capital expenditures arein 2011 were principally development costs (approximately 80%50%, mainly for construction of new production facilities), exploration expenditures (successful or unsuccessful, approximately 10%5%) and acquisitions of proved and unproved properties (approximately 5%40%). In the Downstream segment, about 65%55% of capital expenditures arein 2011 were related to refining activities (essentially 35%70% for existing units including maintenance and major turnarounds and 65%30% for new construction), the balance being used inrelated to marketing/retail activities and for information systems. In the Chemicals segment, capital expenditures relaterelated to all activities in 2011 and arewere split between Base Chemicals (approximately 65%60%) and Specialties Chemicals (approximately 35% 40%). For detailed information on expenditures by business segment, please refer to the discussion of TOTAL’s results for each segment above.
Cash flow Cash flow from operating activities was€19,536 million in 2011 compared to€18,493 million in 2010 and€12,360 million in 2009 compared to€18,669 million in 2008 and€17,686 million in 2007.2009. The€6,3091,043 million decreaseincrease in cash flow from operating activities from 20082010 to 20092011 was due in part to lowerhigher net income (Group share), which decreasedincreased by€2,1431,705 million over the same period. The cash flow from operating activities was also affected by the effect of changes in oil and oil productsproduct 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 productsproduct 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. Whereas in 2008 the Group’s working capital requirement had decreased by€2,571 million due primarily to the decrease in oil and oil products prices particularly in the fourth quarter of the year, in 2009In 2011, the Group’s working capital requirement increased by€3,3161,739 million, mainly as a result of risingdue primarily to the increase in oil and oil products prices over the course of the year. In 2010, the increase was of€496 million. Cash flow used in investing activities was€15,963 million in 2011 compared to€11,957 million in 2010 and€10,268 million in 2009, compared2009. The increase from 2010 to€11,055 million 2011 was due essentially to the higher level of acquisitions made in 2008 and€10,166 million2011 as well as to the larger portfolio of upstream projects that were under development in 2007.2011.
Total expenditures were€24,541 million in 2011, up 51% from€16,273 million in 2010, after having increased 22% from€13,349 million in 2009, down 2% from€13,640 million in 2008, after having increased 16% from€11,722 million in 2007.2009. During 2009, 74%2011, 88% of the expenditures were made by the Upstream segment (as compared to 73%81% in 20082010 and 76%74% in 2007)2009), 21%8% by the Downstream segment (as compared to 18%14% in 20082010 and 16%21% in 2007)2009) and 5%3% by the Chemicals segment (as compared to 8%4% in 20082010 and 2007)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 compared to2009. In 2011, the Group’s principal divestments were asset sales of€2,5857,705 million, consisting mainly of the Group’s interests in 2008CEPSA, 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€1,5563,452 million, consisting mainly of Sanofi shares and the Group’s interests in 2007.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-AventisSanofi shares. In 2008, the Group’s principal divestments were asset sales of€1,451 million, consisting mainly of Sanofi-Aventis shares, and reimbursements for carried investments in Yemen, Venezuela and Nigeria. 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 million. Cash flow used in financing activities was€4,309 million in 2011, compared to€3,348 million in 2010 and€2,868 million in 2009, compared to€793 million in 2008 and€3,342 million in 2007.2009. The increase in cash flow used in financing activities in 2011 compared to 2008 is2010 was due primarily to a higher decrease in current borrowings (€(3,870) million in 20092011 compared to an increase€(731) million in 2008, partially2010), partly offset by a higher issuance of non-current financial debt (€4,069 million in 2009.2011 compared to€3,789 million in 2010) and an increase in current financial assets and liabilities (€896 million in 2011 compared to€(817) million in 2010). Indebtedness TOTAL’s non-current financial debt was€22,557 million at year-end 2011 compared to€20,783 million at year-end 2010 and€19,437 million at year-end 2009 compared to€16,191 million at year-end 2008 and€14,876 million at year-end 2007.2009. 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 compared to2009. €12,321 million at year-end 2008 and€5,988 million at year-end 2007.Shareholders’ equity
Shareholders’ equity was€53,53969,389 million at December 31, 2009,2011, compared to€49,95061,271 million at year-end 20082010 and€45,70053,539 million at year-end 2007.2009. Changes in shareholders’ equity in 2011 were primarily due to the addition of net income and translation adjustments, which were only partially offset by the payment of dividends. Changes in shareholders’ equity in 2010 were primarily due to the addition of net income and translation adjustments, which were only partially offset by the payment of dividends. Changes in shareholders’ equity in 2009 were primarily due to the addition of net income, which was only partially offset by the payment of dividends and translation adjustments. During 2009, TOTAL did not repurchase any of its own shares. Changes in shareholders’ equity in 2008 were primarily due toshares during the addition of net income, which was only partially offset by the payment of dividends, translation adjustmentsyears 2009, 2010 and share buybacks. During 2008, TOTAL repurchased 27.6 million of its own shares for€1,339 million. Changes in shareholders’ equity in 2007 were primarily due to the addition of net income, which was only partially offset by the payment of dividends, translation adjustments and share buybacks. During 2007, TOTAL repurchased 32.4 million of its own shares for€1,787 million.2011. Net-debt-to-equity As of December 31, 2009,2011, 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 27%23%, compared to 23%22% and 27% at year-ends 20082010 and 2007,2009, respectively. Over the 2007-20092009-2011 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 net income increased shareholders’ equity and repurchases of shares performed in 2007 and 2008dividends paid throughout the period decreased shareholders’ equity. As of December 31, 2009,2011, TOTAL S.A. had $9,322$10,139 million of long-term confirmed lines of credit, of which $9,289$10,096 million were unused. In 2010,2012, based on the Group’s capital expenditures budget and after payment of dividends, the Company expects to maintain its net debt-to-equity ratio 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 billion 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 billion,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 same Note.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) | | — | | 6,860 | | 5,583 | | 5,709 | | 18,152 | | | — | | | | 8,052 | | | | 5,069 | | | | 7,308 | | | | 20,429 | | Current portion of non-current debt obligations(b) | | 2,111 | | — | | — | | — | | 2,111 | | | 3,488 | | | | — | | | | — | | | | — | | | | 3,488 | | Finance lease obligations(c) | | 22 | | 75 | | 71 | | 114 | | 282 | | | 25 | | | | 70 | | | | 64 | | | | 18 | | | | 177 | | Asset retirement obligations(d) | | 235 | | 453 | | 519 | | 4,262 | | 5,469 | | | 272 | | | | 469 | | | | 335 | | | | 5,808 | | | | 6,884 | | Operating lease obligations(c) | | 523 | | 675 | | 447 | | 894 | | 2,539 | | | 762 | | | | 968 | | | | 651 | | | | 940 | | | | 3,321 | | Purchase obligations(e) | | 4,542 | | 4,320 | | 5,599 | | 35,347 | | 49,808 | | | 11,049 | | | | 11,058 | | | | 9,476 | | | | 45,770 | | | | 77,353 | | Total | | 7,433 | | 12,383 | | 12,219 | | 46,326 | | 78,361 | | | 15,596 | | | | 20,617 | | | | 15,595 | | | | 59,844 | | | | 111,652 | |
(a) | Non-current debt obligations are included in the items “Non-current financial debt” and “Hedging instruments of non-current financial debt” of the Consolidated Balance Sheet. The figure in this table is net of the non-current portion of issue swaps and swaps hedging bonds, and excludes non-current finance lease obligations of€260152 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€2225 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, 2009,2011, less the financial expense due on finance lease obligations for€5331 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 2009,2011, Research & Development (“R&D”)(R&D) expenses amounted to€650776 million, compared to€612715 million in 20082010 and€594650 million in 2007.2009. The process initiated in 2004 to increase R&D budgets continued in 2009.2011. In addition, the Group implementedset up in 2009 a financial devicestructure to contribute to the development of start-ups that specialize in the development of innovative technologies in the field of energy.energy technologies. In 2009, 4,0162011, 3,946 employees were dedicated to R&D, compared to 4,2854,087 in 20082010 and 4,2164,016 in 2007.2009. The reduction in 2011 can be explained, in particular, by the sale of part of the Specialty Chemicals’ Resins activity. There are six major axes for research and developmentR&D focuses at TOTAL: developing knowledge, tools and technological mastery to discover and profitably operate technologically complex oil and gas resources to help meet the global demand for energy; developing and industrializing solar, biomass and carbon capture and storage technologies to contribute to the evolution of the globalhelp prepare for future energy mix; understanding and measuring the impacts of the Group’s operations and products on ecosystems (water, soil, air, biodiversity) to strengthen environmental safety, as part of the regulation in place, and reduce their environmental footprint to achieve sustainability in the Group’s operations;needs;
developing practical, innovative and competitive materials that meet the market’scustomers’ specific needs, contribute to the emergence of new features and systems, enable current materials to be replaced by materials achievingshowing higher performance for users, and address the challenges of improved energy efficiency, lower environmental impact and toxicity, and achieve better management of producttheir life cycle;cycle and waste recovery; developing, industrializing and improving first-level competitive processes for the conversion processes of oil, coal and biomass resources to adapt to changes in resources and markets, improve reliability and safety, achieve better energy efficiency, reduce the | | environmental footprint and maintain the Group’s economic margins in the long term; |
understanding and measuring the impacts of the Group’s operations and products on ecosystems (water, soil, air, biodiversity) to improve environmental safety, in conformity with existing regulation, and reduce the Group’s environmental footprint and maintain economic margins on the long term;to achieve sustainability in its operations; and mastering and using innovative technologies such as biotechnologies, materials sciences, nanotechnologies, high-performance computing, information and communications technologies and new analytic techniques. These issues are addressed synergistically within a portfolio of projects. Different aspects may be looked at independently by different divisions.
The Group intends to increase R&D atin all theof its business units through cross-functional themes and technologies. Attention is paid to synergies of R&D efforts between business units. The Group has twenty-two R&D sites worldwide and has developed approximately 600 partnerships with other industrial groups and academic or specialhighly specialized research institutes. TOTAL also has a permanently renewed network of scientific advisors worldwide that monitor and advise on matters of interest to the Group’s R&D activities. Long-term partnerships with universities and academic laboratories deemed strategic in Europe, the United States, Japan and China, as well as innovatinginnovative small businesses, are part of the Group’s approach. Each business unit is actively developing an activeits intellectual property activity, aimed at protectingpolicy in order to protect its developments, allowinginnovations, to permit its activity to develop without constraints as well as facilitatingand to facilite its partnerships. In 2009, close to2011, more than 250 new patentspatent 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 3-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, 2009,2011, the Board of Directors had fifteen members. Of these,members, including one director had 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 2009.(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 64 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 380,576 shares.186,576 shares in full and 144,000 shares by usufruct. Principal other directorships • | | Director of Sanofi-Aventis.Sanofi*(2) |
Director of Air Liquide.
• | | Director ofRenault S.A.* |
• | | Director ofRenault S.A.S. |
• | | Director ofBombardier Inc. (Canada)* |
Director of Bombardier 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. |
Underlined | companies are companies excluded from the group in which the director has his or her main duties. |
Christophe de MargeriePatrick Artus
58 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 heldBorn on May 12, 2006 and became Chief Executive Officer of TOTAL on FebruaryOctober 14, 2007.
Director of TOTAL S.A. since 2006 and until 2012 (last renewal: May 15, 2009)1951 (French).
Holds 85,230 TOTAL shares and 43,714 shares of the TOTAL ACTIONNARIAT FRANCE collective investment fund.
Principal other directorships
Chairman and Chief Executive Officer of Elf Aquitaine.*
Member of the Supervisory Board of Vivendi.*
Patrick Artus
58 years old.Independent director.
A graduate from theÉcole Polytechnique, theÉcole Nationale de la Statistique et de l’Administration de l’Économie (ENSEA)(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 modelling.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 a professor at theÉcole Polytechnique andan associate professor at the University of Paris I, Sorbonne. He is also a member of the council of economic advisors to the French Prime Minister and of the French National Economic Commission. He has authored many articles and books. Director of TOTAL S.A. since May 5, 2009 and until 2012.
Holds 1,000 shares.
Principal other directorships
* | Company names marked with an asterisk are publicly listed companies. |
1. | Information as of December 31, 2009. |
Patricia Barbizet
54 years old.
A graduate of theÉcole Supérieure de Commerce of Paris in 1976, Mrs. Barbizet started her career in the Renault Group as the Treasurer of Renault Véhicules Industriels and Chief Financial Officer of Renault Crédit International. She joined the Pinault group in 1989 as the Chief Financial Officer and then served as the Chief Executive Officer of Financière Pinault until 2009. Since 1992, she has been the Director and Chief Executive Officer of Artémis. Since 2005, she has been the Vice Chairman of the PPR Board of Directors and Chairman of Christie’s.
Director of TOTAL S.A. since May 18, 2008 and until 2011.
Holds 1,000 shares.
Principal other directorships
• | | Vice Chairman of PPR* Board.
|
Chief Executive Officer and Director of Artémis.
Director of Air France-KLM.*
Daniel Boeuf
61 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, until, in his last operational position, he was 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 from 1999 to 2009, he served as the Chairman of its Supervisory Board from 2003 to 2006.
Director of TOTAL S.A. since 2004 (last renewal: May 11, 2007; end of office: December 31, 2009, pursuant to Article 11 of the Company’s bylaws).
Holds 4,396 TOTAL shares and 4,394 shares of the TOTAL ACTIONNARIAT FRANCE collective investment fund.
Daniel Bouton
59 years old.
Inspector General of Finance, Mr. Bouton has held various positions within the French Ministry of Economy. He served as Budget Director at the Ministry of Finance from 1988 to 1990. He joined Société Générale in 1991, where he was appointed Chief Executive Officer in 1993, then Chairman and Chief Executive Officer in November 1997. He has been serving as the Chairman of the
Société Générale group since May 12, 2008, and has been the honorary President since May 6, 2009.
Director of TOTAL S.A. since 1997 and until 2012 (last renewal: May 15, 2009).
Holds 3,200 shares.
Principal other directorships
Director of Veolia Environnement.*
* | Company names marked with an asterisk are publicly listed companies. |
Bertrand Collomb
67 years old.
A graduate of theÉcole Polytechnique and a Mining Engineer, Mr. Collomb held a number of positions within the Ministry of Industry and other staff 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 President since 2007.
He is also President of theInstitut des Hautes Études pour la Science et la Technologie (IHEST) and theInstitut Français des Relations Internationales (IFRI).
Director of TOTAL S.A. since 2000 and until 2012 (last renewal: May 15, 2009).
Holds 4,712 shares.
Principal other directorships
Director of DuPont* (United States).
Director of Atco* (Canada).
Paul Desmarais Jr.(1)
55 years old.
A graduate of McGill University in Montreal and INSEAD in Fontainebleau, Mr. Desmarais was elected Vice Chairman (1984) then Chairman of the Board (1990) of Corporation Financière Power, a company he helped to found. Since 1996, he has served as Chairman of the Board and Co-Chief Executive Officer of Power Corporation of Canada.
Director of TOTAL S.A. since 2002 and until 2011 (last renewal: May 16, 2008).
Holds 2,000 ADRs (corresponding to 2,000 shares).
Principal other directorships
• | | Chairman of the Board, Co-Chief Executive Officer and Member of the Executive Committee of Power Corporation of Canada.*
|
Member of the Board, Co-Chief Executive Officer and Chairman of the Executive Committee of Corporation Financière Power* (Canada).
Vice Chairman of the Board of Directors and Acting Managing Director of Pargesa Holding S.A.* (Switzerland).
Member of the Board of Directors and Executive Committee of Great-West Lifeco Inc.* (Canada).
Member of the Board of Directors and Executive Committee of Groupe Bruxelles Lambert S.A.* (Belgium).
Director of GDF Suez* (France).
Director of IGM Financial Inc.* (Canada).
Bertrand Jacquillat
65 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, Vice President of theCercle des Economistes and member of the Economic Analysis Board to the Prime Minister. He is the founding chairman of Associés en Finance..
Director of TOTAL S.A. since 1996May 15, 2009 and until 2011 (last renewal: May 16, 2008).2012. Member of the Compensation Committee. Holds 3,6001,000 shares. Principal other directorships ChairmanPatricia Barbizet
Born on April 17, 1955 (French). Independent director. A graduate of theÉcole Supérieure de Commerce of Paris in 1976, Ms. Barbizet started her career in the Renault Group as the Treasurer of Renault Véhicules Industriels and Chief Financial Officer of Renault Crédit International. She joined the Pinault group in 1989 as the Chief Financial Officer. In 1992, she became the Chief Executive Officer of Associés en Finance.Financière Pinault. She was the President of the Supervisory Board of the Pinault Printemps Redoute group until May 2005 and became Vice-President of the Board of Directors of PPR in May 2005. Patricia Barbizet is also a member of the Board of Directors of TOTAL, TF1, Air France-KLM andFonds stratégique d’investissement. Director of TOTAL S.A. since 2008 — Last renewal: May 13, 2011 and until 2014. Chairperson of the Audit Committee and member of the Strategic Committee. Holds 1,000 shares. Principal other directorships Vice Chairman of PPR* Board Chief Executive Officer and Director of Artémis Chief Executive Officer (non-Director) of Financière Pinault Director and Deputy Chief Executive Officer of Société Nouvelle du Théâtre Marigny Permanent representative of Artémis at the Board of Directors of Agefi Permanent representative of Artémis at the Board of Directors of Sebdo le Point Member of the Management Board of Château Latour (SCI) Chief Member of the Supervisory Board of Klépierre.*Yves Saint Laurent • | | Administratore Delagatoandadministratore of Palazzo Grazzi |
Non-executive Director of Tawa Plc* MemberChairman of the Supervisory Board of Presses Universitaires de France (PUF).Directors of Christie’s International Plc
Board member of Gucci Group N.V. • | | Director ofAir France-KLM* |
• | | DirectorFonds stratégique d’investissement (French government sovereign fund) |
* | Company names marked with an asterisk are publicly listed companies. |
1.Underlined | companies are companies excluded from the group in which the director has his or her main duties. |
Daniel Bouton Born on April 10, 1950 (French). Independent director. Inspector General of Finance, Mr. Bouton has held various positions within the French Ministry of Economy. He served as Budget Director at the Ministry of Finance from 1988 to 1990. He joined Société Générale in 1991, where he was appointed Chief Executive Officer in 1993, then Chairman and Chief Executive Officer in November 1997. He served as Chairman of the Société Générale group until May 12, 2008 and has been the Honorary Chairman since May 6, 2009. Director of TOTAL S.A. since 1997 — Last renewal: May 15, 2009 until 2012. Holds 3,200 shares. Principal other directorships • | | Director ofVeolia Environnement* |
Gunnar Brock Born on April 12, 1950 (Swedish). Independent director. Graduated from the Stockholm School of Economics with an MBA grade in Economics and Business Administration, Mr. Brock held various international positions at Tetra Pak. He served as Chief Executive Officer of Alfa Laval from 1992 to 1994 and as Chief Executive Officer of Tetra Pak from 1994 to 2000. After 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. |
Underlined | companies are companies excluded from the group in which the director has his or her main duties. |
Marie-Christine Coisne-Roquette Born on November 4, 1956 (French). Independent director. A graduate of the University of Paris X Nanterre (law and English) and admitted to the Paris and New York Bar Associations in 1980, Ms. Coisne-Roquette worked as an attorney in Paris and New York until 1988, when she joined the family-owned Sonepar group. From 1988 to 1998, while also serving as Chief Executive Officer of the family-owned Colam Entreprendre holding company, she held several consecutive operational directorships at Sonepar S.A., where she was appointed Chairman of the Board in 1998. She has served as Chairman and Chief Executive Officer of Sonepar since 2002. A member of the Executive Board of MEDEF since 2000, Ms. Coisne-Roquette has chaired that organization’s Tax Commission since 2005. Director of TOTAL S.A. since May 13, 2011 and until 2014. Member of the Audit Committee since May 13, 2011. Holds 1,130 shares. Principal other directorships Chairperson and Chief Executive Officer of Sonepar S.A. Chairman and Chief Executive Officer of Colam Entreprendre Director of Hagemeyer Canada, Inc. President of the Supervisory Board of OTRA N.V. Director of Sonepar Canada, Inc. President of the Supervisory Board of Sonepar Deutschland GmbH Director of de Sonepar Ibérica Director of de Sonepar Italia Holding Chairperson of the Board of Directors of Sonepar Mexico Member of the Supervisory Board of Sonepar Nederland B.V. Director of Sonepar USA Holdings, Inc. Director of Feljas and Masson SAS Permanent representative of Colam Entreprendre, member of the Board of Directors at Cabus & Raulot (S.A.S.) • | | Permanent representative of Colam Entreprendre and Sonepar, co-administrators of Sonedis (société civile) |
Permanent representative of Sonepar, Director of Sonepar France Permanent representative of Sonepar, President of Sonepar International (S.A.S.) Permanent representative of Colam Entreprendre, Director of Sovemarco Europe (S.A.) • | | Co-manager ofDéveloppement Mobilier & Industriel(D.M.I.) (société civile) |
• | | Manager ofKer Coro (société civile immobilière) |
Bertrand Collomb Born on August 14, 1942 (French). Independent director. A graduate of theÉcole Polytechnique and a member of France’s engineeringCorps des Mines, Mr. Collomb held a number of positions within the Ministry of Industry and other cabinet positions from 1966 to 1975. He joined the Lafarge group in 1975, where he served in various management positions. He served as Chairman and Chief Executive Officer of Lafarge from 1989 to 2003, then as Chairman of the Lafarge Board of Directors from 2003 to 2007, and has been the Honorary Chairman since 2007. He is also Chairman of theInstitut des Hautes Études pour la Science et la Technologie (IHEST) and a Board member of theInstitut Européen de la Technologie. Director of TOTAL S.A. since 2000 — Last renewal: May 15, 2009 until 2012. Member of the Compensation Committee and the Nominating & Governance Committee. Holds 4,712 shares. Principal other directorships • | | Director ofDuPont* (United States) |
• | | Director ofAtco* (Canada) |
* | Company names marked with an asterisk are publicly listed companies. |
Underlined | companies are companies excluded from the group in which the director has his or her main duties. |
Paul Desmarais Jr.(1) Born on July 3, 1954 (Canadian). Independent director. A graduate of McGill University in Montreal and INSEAD in Fontainebleau, Mr. Desmarais was elected Vice Chairman (1984) then Chairman of the Board (1990) of Corporation Financière Power, a company he helped to found. Since 1996, he has served as Chairman of the Board and Co-Chief Executive Officer of Power Corporation of Canada. Director of TOTAL S.A. since 2002 — Last renewal: May 13, 2011 until 2014. Holds 2,000 ADRs (corresponding to 2,000 shares). Principal other directorships Chairman of the Board, Co-Chief Executive Officer and Member of the Executive Committee of Power Corporation of Canada* Co-Chairman of the Board and member of the Executive Committee of Corporation Financière Power* (Canada) Vice Chairman and Acting Managing Director of Pargesa Holding S.A.* (Switzerland) Director and member of the Executive Committee of La Great-West Compagnie d’assurance-vie (Canada) Director and member of the Executive Committee of First Great-West Life & Annuity Insurance Company (United States) Director and member of the Executive Committee of Great-West Lifeco Inc.* (Canada) Director of Great West Financial (Canada) Inc. (Canada) Director and member of the Permanent Committee of Groupe Bruxelles Lambert S.A.* (Belgium) Director and member of the Executive Committee of Groupe Investors Inc. (Canada) Director and member of the Executive Committee of Groupe d’assurance London Inc. (Canada) Director and member of the Executive Committee of London Life, compagnie d’assurance-vie (Canada) Director and member of the Executive Committee of Mackenzie Inc. Director and Deputy Chairman of the Board of La Presse Ltée (Canada) Director and Deputy Chairman of Gesca Ltée (Canada) Director and member of the Executive Committee of Compagnie d’Assurance du Canada sur la Vie (Canada) Director and member of the Executive Committee of the Corporation Financière Canada Life (Canada) Director and member of the Executive Committee of IGM Inc.* (Canada) Director and Chairman of the Board of 171263 Canada Inc. (Canada) Director of 152245 Canada Inc. (Canada) Director of GWL&A Financial Inc. (United States) Director of Great West Financial (Nova Scotia) Co. (Canada) Director of First Great-West Life & Annuity Insurance Company (United States) Director of Power Communications Inc. Director and Vice Chairman of the Board of Power Corporation International Director and member of the Executive Committee of Putnam Investments LLC Member of the Supervisory Board of Power Financial Europe B.V. Director of Canada Life Capital Corporation Inc. (Canada) Director and member of the Executive Committee of The Canada Life Assurance Company of Canada (Canada) Director and member of the Executive Committee of Crown Life Insurance Company (Canada) Director and Deputy Chairman of the Board of Square Victoria Communications Group Inc. Member of the Supervisory Board of Parjointco N.V. (1) | Mr. Desmarais Jr. is a director of Groupe Bruxelles Lambert, which acting in concert with Compagnie Nationale à Portefeuille, to the Company’s knowledge, owns 5.4%5.5% of the Company’s shares and 5.5% of the voting rights. Mr. Demarais Jr. disclaims beneficial ownership of such shares. |
* | Company names marked with an asterisk are publicly listed companies. |
Underlined | companies are companies excluded from the group in which the director has his or her main duties. |
Antoine Jeancourt-GalignaniBarbara Kux
72 years old.Born on February 26, 1954 (Swiss).
InspectorIndependent director.
Holder of Finance, Mr. Jeancourt-Galignani held various positions within the Ministry of Finance beforean 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 Deputy Managingmanager for development of emerging markets at ABB and then at Nestlé between 1989 and 1999, she was appointed Executive Director of Crédit AgricoleFord in Europe from 19731999 to 1979. He2003. In 2003, Ms. Kux became Chief Executive Officera member of Indosuez bankthe Management Committee of the Philips group and, starting in 1979 before serving as its Chairman from 1988 to 1994. He then served as Chairman2005, was in charge of Assurances Générales de France (AGF) from 1994 to 2001, before serving as Chairmansustainable development. Since 2008, she has been a member of Gecina from 2001 to 2005, where he served as a director until 2009.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 1994 (last renewal: May 12, 2006; end13, 2011 and until 2014. Member of office: May 15, 2009).the Strategic Committee. Holds 1,000 shares. Principal other directorships Chairman of the Supervisory Board of Euro Disney SCA.*
Director of Kaufman & Broad S.A.*
Member of the SupervisoryManagement Board of Oddo et Cie.Siemens AG*
Anne Lauvergeon(1) 50 years old.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. Anne Lauvergeon has served as Chairman of the Management Board of AREVA sinceAreva from July 2001 to June 2011 and
Chairman and Chief Executive Officer of Areva NC (formerly Cogema) sincefrom June 1999.1999 to June 2011. Director of TOTAL S.A. since 2000 and until 2012 (last— Last renewal: May 15, 2009).2009 until 2012. Member of the Strategic Committee. Holds 2,000 shares. Principal other directorships • | | ChairpersonDirector of the Management Board of Areva.GDF Suez*(1)
|
Chairperson and CEO of Areva NC.
• | | Director ofVodafone Group Plc* |
Director of Vodafone Group Plc.*
Lord Levene of PortsokenClaude Mandil
68 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 United Kingdom 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 International Financial Services.
Chairman of General Dynamics UK Ltd.
Director of Haymarket Group Ltd.
Director of China Construction Bank.*
* | Company names marked with an asterisk are publicly listed companies. |
1. | Mrs. Lauvergeon is Chairperson of the Management Board of Areva, which, to the Company’s knowledge, owns 0.0% of the Company’s shares and 0.0% of the voting rights. Mrs. Lauvergeon disclaims beneficial ownership of such shares. |
Claude Mandil
67 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 appointed Chief Executive Officer, then Chairman and Chief Executive Officer of theInstitut de Développement Industriel (Industry Development Institute)Institute — IDI) until 1988. He was Chief Executive Officer of theBureau de Recherches Bureau 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. |
Underlined | companies are companies excluded from the group in which the director has his or her main duties. |
Michel Pébereau(1) 67 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 BNP Paribas. He has also been theDirectors from 2003 to December 1, 2011, and is currently Honorary Chairman of European Financial Round Table (EFRT) since 2009.BNP Paribas. Director of TOTAL S.A. since 2000 and until 2012 (last— Last renewal: May 15, 2009).2009 until 2012. Chairman of the Compensation Committee and member of the Nominating & Governance Committee. Holds 2,356 shares. Principal other directorships • | | ChairmanDirector of the BoardSaint-Gobain*
|
• | | Director of DirectorsAXA* |
• | | Director of BNP Paribas.EADS N.V.* |
• | | Director ofPargesa Holding S.A.* (Switzerland) |
Director of Saint-Gobain.*
Member of the Supervisory Board of AXA.*
Director of Pargesa Holding S.A.* (Switzerland).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) 60 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. Principal other directorships Director of Compagnie Nationale à Portefeuille.*
Director of Suez-Tractebel.
Acting Managing Director of Groupe Bruxelles Lambert.*Lambert* Director of Brussels Securities (Belgium) Director of GBL Treasury Center (Belgium) Director of Sagerpar (Belgium) Director of GBL Energy Sàrl (Luxembourg) Director of GBL Verwaltung Sàrl (Luxembourg) Director of GBL Verwaltung GmbH (Germany) Director of Ergon Capital Partners (Belgium) Director of Ergon Capital Partners II (Belgium) Director of Ergon Capital Partners III (Belgium) 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.(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 5.5% of the voting rights. Mr. Pébereau disclaims beneficial ownership of such shares. |
2.(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 5.5% 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. |
Underlined | companies are companies excluded from the group in which the director has his or her main duties. |
Serge TchurukGérard Lamarche
72 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. From 2006 to 2008, 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 Weather Investment SPA.Groupe Bruxelles Lambert* • | | Director and member of the Audit Committee ofLegrand* |
Pierre VaillaudOther information
74 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 2000 (last renewal: May 12, 2006; endare 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 office: May 15, 2009).
Principal other directorships
MemberTOTAL S.A. to one of the Supervisory Boardits subsidiary and providing for special benefits upon termination of Oddo et Cie.
Other information
At its meeting on September 15, 2009, the Board of Directors appointed Charles Paris de Bollardière Secretary of the Board. He succeeds Thierry Reveau de Cyrières.such agreement.
The current members of the Board of Directors of the Company have informed the Company that they have not been convicted, have not been associated with a bankruptcy, receivership or liquidation, and have not been incriminated or publicly sanctioned or disqualified, as stipulated in item 14.1 of Annex I of EC Regulation 809/2004 of April 29, 2004. At its meeting held on February 9, 2012, the Board of Directors decided to propose the renewal of the directorships of Ms. Lauvergeon and Messrs. de Margerie, Artus, Collomb, and Pébereau, which are due to expire. At the general Shareholders’ meeting on May 11, 2012, the Board will also propose the nomination of a new independent director, Ms. Anne-Marie Idrac, who will place her expertise of the world of industry at the Board’s disposal and will broaden the representativeness and the diversity of the Board. If the resolution is approved by the Shareholders’ Meeting, the proportion of women sitting in the Board will be one-third. Representative of the Worker’s Council: 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 10, 2010,9, 2012, the Board of Directors, acting on a proposal fromthe recommendation of the Nominating & Governance Committee, reviewed the independence of the Company’s * | Company names marked with an asterisk are publicly listed companies. |
Underlined | companies are companies excluded from the group in which the director has his or her main duties. |
directors as of December 31, 2009. Also based on2011. At the Committee’s proposal,suggestion, the Board considered that, pursuant to the AFEP-MEDEF Code, a director is independent when “he or she has no relationship of any nature,kind with the company,Company, its group,Group or the management of either,its Management, that may compromise the exercise of his or her freedom of judgement”judgment”. Mrs. Barbizet, Messrs. Artus, Bouton, Collomb, Desmarais, Jacquillat, Mandil, Pébereau, de Rudder,
Tchuruk and Lord Levene of Portsoken were deemed to be independent directors.
These directors meetFor each director, this assessment relies on the independence criteria set forth in the AFEP-MEDEF Code withas reminded hereafter:
not to be an employee or a director of the exceptionCompany, or a Group company, and not having been in such a position for the previous five years; not to be a director of one individual who hasa 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 longermore than twelve years. For a company that has long-term investments and activities, a longeryears (upon expiry term of office gives experience and authority, and thereby reinforcesduring which the independence12-year limit is reached). The AFEP-MEDEF Code expressly stipulates that the Board can decide that the implementation of directors. Thecertain 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 concludedobserved that Mr. Tchuruk,Bouton and Mr. de Rudder had exceeded twelve years of service on December 31, 2011. Since the only director concerned by this criterion, shoulddirectorships 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.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. 73%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 are independent.were independent on December 31, 2011. Moreover, the Board noted that the directorships of Ms. Lauvergeon and Messrs. Collomb and Pébereau will exceed twelve years on March 22, 2012 for Messrs. Collomb and Pébereau, and on May 25, 2012 for Ms. Lauvergeron, after the Shareholders’ meeting that will be invited to renew her directorship on May 11, 2012. The Board also notedof Directors deemed that, for a company with a long-term activity and investment cycles of more than ten years, extended directorships and the absencecorresponding experience represent an asset for the Group and a means of potential conflictsconsolidating the independence of interests betweenjudgment of its Directors. The Board concluded that the Companyproposal to renew the directorships of Ms. Lauvergeon and itsMessrs. 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.
Management
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, 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 following individuals were serving as membersequity or the notification of the Executive Committee asBoard for investments exceeding 1% of equity.
As of December 31, 2009:2011, the members of TOTAL’s Executive Committee were as follows: Christophe de Margerie, Chairman of the Executive Commitee (ChiefCommittee (Chairman and Chief Executive Officer); François Cornélis, Vice Chairman of the Executive Committee (President of the Chemicals segment)division); Michel Bénézit (President of the Refining & Marketing division); Yves-Louis Darricarrère (President of the Exploration & Production division); Jean-Jacques Guilbaud (Chief Administrative Officer); and Patrick de La Chevardière (Chief Financial Officer). In the context of the reorganization of its Downstream and Chemicals segments, TOTAL’s Executive Committee was changed on January 1, 2012. As of that date, the members of TOTAL’s Executive Committee are: Christophe de Margerie, Chairman of the Executive Committee (Chairman and Chief Executive Officer); Philippe Boisseau (President of the Supply & Marketing segment); Yves-Louis Darricarrère (President of the Exploration & Production division and Gas & Power division); Jean-Jacques Guilbaud (Chief Administrative Officer); Patrick de La Chevardière (Chief Financial Officer); and Patrick Pouyanné (President of the Refining & Chemicals segment). The Management Committee The Group Management Committee facilitates coordination among the divisionsdifferent entities of the Group and monitors the operating results of the operational divisions and the activity reports of thesethe functional divisions. In addition to the members of the Executive Committee, the following eighteentwenty-two individuals from various operating divisions and non-operating departments and operating divisions served as members of the Management Committee as of December 31, 2009: Corporate2011:
• | | 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. |
René Chappaz, Vice President,In addition to the members of the Executive Career Management.
Yves-Marie Dalibard, Vice President, Corporate Communications.
Peter Herbel, General Counsel.
Jean-Marc Jaubert, Senior Vice President, Industrial Safety.
Manoelle Lepoutre, Executive Vice President, Sustainable DevelopmentCommittee, the following twenty-five individuals from various operating divisions and non-operating departments served as members of the Environment.
Jean-François Minster, Senior Vice President, Scientific Development.
Jean-Jacques Mosconi, Vice President, Strategic Planning.
François Viaud, Senior Vice President, Human Resources.
UpstreamManagement Committee as of January 16, 2012:
Marc Blaizot, Senior Vice President, Geosciences, Exploration & Production.
• | | 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; |
Philippe Boisseau, President, Gas & Power.
• | | 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. |
Jacques Marraud des Grottes, Senior Vice President, Africa, 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.
Eric de Menten, Senior Vice President, Marketing Europe, Refining & Marketing.
Bertrand Deroubaix, General Secretrary, Refining & Marketing.
André Tricoire, Senior Vice President, Refining, Refining & Marketing.
Chemicals
Françoise Leroy, General Secretary, Chemicals.
In addition, Jérôme Schmitt servesserved as the Group’s Treasurer until January 1, 2012. Effective January 2, 2012, Humbert de Wendel is the Group’s Treasurer.
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”). |
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€0.971.07 million, in 2009 in accordance with the decision of the Shareholders’ Meeting held on May 11, 2007. Therenoting that there were fifteen directors as of December 31, 2009, compared2011, as at year-end 2010. The 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 sixteen directors as of December 31, 2008. Compensation was paid totake into account each director’s actual attendance at the membersmeetings of the Board of Directors in 2009 based onand its Committees.
To take into account the following principles, which remained unchanged from 2008: 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;
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, suchor Strategic Committee meeting actually attended; an amount being 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; andFrance 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 Chairman and the Chief Executive Officercorporate executive officers Based on a proposal by the Compensation Committee, the Board adopted the following policy for determining the compensation and other benefits of the corporate executive officers (the Chairman and of the Chief Executive Officer:Officer): Compensation and benefits for the Chairman and the Chief Executive Officer are set by the Board of Directors after considering proposals from the Compensation Committee. Such compensation shall be reasonable and fair, in a context that values both teamwork and motivation within the Company. Compensation for the Chairman and the Chief Executive Officer is related to market practice, work performed, results achievedobtained and responsibilities held. Compensation for the Chairman and the Chief Executive Officer includes both a fixed portion and a variable portion. The fixed portion each of which is reviewed annually.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 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 forcompensation 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 are designed to allow exceptional circumstances to be taken into account, when appropriate.of the Chairman and the Chief Executive Officer over several years and in light of the Company’s performance. The Group does not have anya specific pension plan for the Chairman and the Chief Executive Officer. They are eligible for retirement benefits and pensions available to other employees ofcertain 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. AwardsThe allocation of stock options are considered in light of the amount of the total compensation paidand performance shares to the Chairman and the Chief Executive Officer. The exerciseOfficer is examined in the light of stock options to whichall the Chairman and the Chief Executive Officer are entitled is subject to a performance condition.forms of compensation of each person.
The exercise price for stock options awarded is not discounted compared to the market price, at the time of the grant, for the underlying share. Stock options and performance shares are awarded at regular intervals to prevent any opportunistic behavior. The exercise of options and the definitive allocation of performance shares to which the Chairman and the Chief Executive Officer are entitled are subjected to performance criteria that must be met over several years. The Board has putputs in place restrictions on the transfer of a portion of shares issuedheld upon the exercise of options.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 do not receive restricted share grants.are made public after the meeting of the Board of Directors that approves them. Compensation of the Chairman and Chief Executive Officer The total gross compensation paid to Mr. Desmarestde Margerie for fiscal 2009his duties as Chairman and Chief Executive Officer was set by the Board of Directors of TOTAL S.A., based uponon a recommendation by the proposalCompensation Committee in line with the guidance of the Compensation Committee. This compensation is composed of aAFEP-MEDEF Corporate Governance Code. It includes an annual fixed base salary of€1,100,0001,500,000, and a variable portion.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 calculatedbased on criteria determined by taking into account the Group’s return on equity, the Group’s earnings comparedBoard of Directors. The equivalent of up 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 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 thatsalary. Thethe Chairman and Chief Executive Officer’s objectives related to personal contribution were considereddeemed to be mostlysubstantially fulfilled and taking into accountassessed to what extent financial performance criteria had been met, the comparison of TOTAL’s earnings withBoard set the major international oil companies that are its competitors, the
(1) | ExxonMobil, BP, Shell and Chevron. |
variable portion paidpayable to the ChairmanMr. de Margerie in 20102012 at€1,530,000 for his contribution in 2009 amounted2011, equivalent to€871,852. The total gross compensation paid to the Chairman for fiscal year 2009 amounted to€1,971,852.
Mr. Thierry Desmarest’s total gross compensation for fiscal 2008, as Chairman 102% of the Board of Directors, amounted to€2,069,430, composed of ahis fixed base salary of€1,100,000 and a variable portion of€969,430 paid in 2009.
Mr. Desmarest does not receive any in-kind benefits.
See the tables “Summary of Compensation, Stock Options and Restricted Shares Granted 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 Officersalary.
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 2009year, 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 set by the Board of Directors, based upon the proposal of the Compensation Committee. This compensation is€1,030,359, composed of a fixed base salary of€1,310,000507,097 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 may be increased up to 165% for exceptional performance. The objectives related to personal contribution were considered to be mostly 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 in 2010 for his contribution in 2009 amounted to€1,356,991.
The total gross compensation523,262 paid to the Chief Executive Officer for fiscal year 2009 amounted to€2,666,991.
in 2011. Mr. Christophe de Margerie’s total gross compensation as Chairman and Chief Executive Officer for fiscal 2008 amounted tothe period between May 22, 2010 and December 31, 2010 was€2,802,875,1,977,763, composed of a fixed base salary of€1,250,000919,355 and a variable portion of€1,552,8751,058,408 paid in 2009.2011. As Chairman and Chief Executive Officer, Mr. Christophe de Margerie has the use of a company car.car, receives the health coverage provided for Group employees and is eligible for the life insurance plan open to the Group’s executive officers (see “— Pensions and other commitments” below). See the tables “Summary of Compensation, Stock Optionscompensation, stock options and Restricted Shares Grantedperformance shares awarded to the Chairman and the Chief Executive Officer” and “Compensation of the Chairman“Chairman and the Chief Executive Officer”Officer’s compensation” below for additional compensation information. Executive Officer Compensationofficer compensation In 2009,2011, the aggregate amount paid directly or indirectly by the French and foreign affiliatescompanies belonging to the Group of the Company as compensation to the executive officers of TOTAL in office as ofat December 31, 20092011 (members of the Management Committee and the Treasurer; twenty-five individuals)Treasurer) as a group was€17.120.4 million (twenty-nine individuals), including€89 million paid to the six members of the Executive Committee. Variable compensation accounted for 44.5%42.4% of the aggregate amount of€17.120.4 million paid to executive officers. Pensions and other commitments 1) | ThePursuant to applicable law, the Chairman and the Chief Executive Officer pursuant to applicable law, areis eligible for the basic French social security pension and for pension benefits under the ARRCO (French (Association for Complementary Pension Schemes)pour le Régime de RetraiteComplémentaire des Salariés) and AGIRC (French executive(Association Générale des Institutions de Retraite des Cadres) government-sponsored supplementary pension scheme federation) complementary pensions, RECOSUP (French Collective Supplementary Pension Scheme)schemes. He also participates in the internal defined |
| contribution pension plan and the defined benefit pension plans, and the supplementary pension plan, known as RECOSUP, created by the Company. This supplementary pension plan, which is not limited to the Chairman and the Chief Executive Officer, is detaileddescribed 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 the Chief Executive Officer are eligible forparticipates 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 annualceiling for calculating French social security threshold multiplied by eight.contributions (€36,372 in 2012). Compensation above this amount does not qualify as pensionable compensation under either government-sponsored or contractual pension schemes. |
ThisTo be eligible for this supplementary pension plan, is financedparticipants must meet specific age and managedlength of service criteria. They must also still be employed by TOTAL S.A.the Company upon retirement, unless they retire due to awarddisability or had taken early retirement at the Group’s initiative after the age of 55.
The plan provides participants with a pension that is based onequal to the periodsum of employment (up to a limit1.8% of twenty years) and the portion of annual grossthe reference compensation (including fixedbetween eight and variable portions) that exceeds by at least eightforty times the annual ceiling for calculating French social security threshold. This pensioncontributions, and 1% of the reference compensation between forty and sixty times the annual ceiling for calculating French social security contributions, which is indexedmultiplied by the number of years of service (up to twenty years). It is adjusted in line with changes in the value of the ARRCO index.pension point and strictly capped as described in point 1 above. As of December 31, 2009, the Group’s supplementary pension obligations related to the Chairman are the equivalent of an annual pension of 26.3% of the Chairman’s 2009 compensation. For the Chief Executive Officer,2011, the Group’s pension obligations are, as of December 31, 2009,to Mr. de Margerie under the defined
benefit supplementary pension plan represented the equivalent of an annual pension of 18.8%18.01% of his 2009 compensation. gross annual compensation paid in 2011.3) | 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 areis also entitled to a lump-sum retirement benefitsbenefit equal to thosethat available to eligible members of the Group under the French National Collective Bargaining Agreement for the Petroleum.Petroleum Industry. This benefit amounts to 25% of the gross annual compensation (including fixed(fixed and variable portions) ofreceived in the 12-month period preceding retirement. Pursuant to the retirementprovisions 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 the Chief Executive Officer.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 or theand Chief Executive Officer’s employmentOfficer is terminatedremoved from office or his term of office is not renewed by the Company, he is eligibleentitled to compensation for severance benefitsloss of office equal to two times hisyears’ gross annual compensation. The calculation will be based on the gross compensation (including both fixed and variable)variable portions) paid in the 12-month period preceding the termination or the non-renewal of his term of office. |
The severance benefitsThis compensation for loss of office to be paid uponin the event of a change of control or a change of strategy of the Company are cancelledwould not be due in the casecases of gross negligence or wilfulwillful misconduct or if the Chairman or theand 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. DesmarestPursuant to the provisions of Article L. 225-42-1 of the French Commercial Code, this benefit is eligiblesubject to claim his full retirement benefits, these provisions are only relevant to Mr. de Margerie.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. |
6) | The commitments related to the supplementary pension plan, retirement benefits and severance benefits upon termination of employment or term of office are subject to the procedure for regulated agreements set forth in article L. 225-38 of the French Commercial Code. |
7) | Pursuant to the provisions of the French law of August 21, 2007, which modifies articleIn addition, in compliance with Article L. 225-42-1 of the French Commercial Code, the commitments described in items 4points 3 and 5 above are subject to performance conditions.conditions that are deemed to be met if at least two of the following three criteria are satisfied: |
These performance conditions are deemed to be met if at least two of the three following criteria are satisfied:
Thethe average ROE (Return On Equity)(return on equity) over the three years immediately preceding the year in which the officer retires is at least 12%.;
Thethe average ROACE (Return On Average Capital Employed)(return on average capital employed) over the three years immediately preceding the year in which the officer retires is at least 10%.;
The Company’sTOTAL’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 hasfor directors for fiscal year 2011, the followingannual supplementary pension commitments, (describedreceived by Mr. Desmarest in paragraph 2, above) as defined under French law,relation to Messrs. Tchuruk and Vaillaud: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. |
The Company has funded an annual supplementary pension for Mr. Tchuruk related to his previous employment by the Group of approximately€€74,379 (December 31, 2009 value) indexed to the ARRCO index.
The Company has funded a supplementary pension for Mr. Vaillaud related to his previous employment by the Group of approximately€53,431 indexed to the ARRCO index.
9) | At year end 2009,As of December 31, 2011, the total amount of the Group’s commitments under pension commitments related to the directors of the Groupplans and similar for company officers is equal to€28.131.2 million. |
| | | | | | | | | | Chairman and Chief Executive Officer Summary table at February 29, 2012 | | Employment
as of February 28, 2010contract
| | Employment
contractRetirement benefit and supplementary pension plans | | Benefits or advantages due or likely to be due upon termination or change of office | | | Benefits related
to a non-compete
agreement | | Benefits or advantages
due or likelyrelated to be
due after
termination or
change of officea non-compete agreement | Thierry DesmarestChristophe de Margerie
Chairman and Chief Executive Officer ChairmanStart of the Board of Directors
Member of the Board since May 1995office: February 2007(a)
ExpiryTerm of current term of office:
May 21, 2010 Shareholders’ Meeting
| | NO | | NO | | | NO | | YES
(retirement benefit)(b)
(supplementary pension plan also applicable to some Group employees)
| Christophe de Margerie
Chief Executive Officer
Member of the Board since February 2007
Expiry of current term of office: The Shareholders’ Meeting called in 2012 to approve the financial statements for the year ending December 31, 2011
| | NO | | YES
(termination benefitretirement benefit)(b) |
)(internal defined supplementary pension plan(c) and corporate RECOSUP defined contribution pension plan(d) also applicable to certain Group employees)
| | NO | | YES (retirement benefit)compensation for loss of office)(c)(e) (supplementary pension plan also applicable to some Group employees)
| | NO |
(a) | Chief Executive Officer since February 13, 2007, and Chairman and Chief Executive Officer until February 13, 2007, and Chairman of the Board of Directors since February 14, 2007.May 21, 2010. |
(b) | Payment subject to a performance condition in accordance with the decision of the Board of Directors on February 11, 2009. |
(c) | Payment subject to a performance conditionconditions in accordance with the decision of the Board of Directors on February 11, 2009, and confirmed by the Board of Directors on May 15, 2009.2009 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) | Representing an annual pension that would be equivalent, as of December 31, 2011, to 18.01% of the annual compensation for 2011. |
(d) | Mr. de Margerie’s pension benefit represented a booked expense of€2,121 for fiscal year 2011. |
(e) | Payment subject to performance conditions in accordance with the decision of the Board of Directors on February 11, 2009, and confirmed by the Board of Directors on May 15, 2009 and May 21, 2010. Details of these commitments are set out in points 5 and 7 above. |
Stock options and restrictedperformance share grants policy General policy Stock options and restrictedperformance share grants put in place by TOTAL S.A. concern only TOTAL shares. No options for or restricted grants of performance shares of any of the Group’s listed subsidiaries are awarded.awarded by TOTAL S.A. All plansgrants are approved by the Board of Directors, based on recommendations by the Compensation Committee. For each plan, the Compensation Committee recommends a list of beneficiaries, the beneficiariesconditions and the number of options or restrictedperformance shares grantedawarded to each beneficiary. The Board of Directors then gives final approval for this list.list and the grant conditions. Stock options have a term of eight years, with an exercise price set at the average of the openingclosing TOTAL share prices on Euronext Paris during the twenty trading days prior to the awardgrant date, without any discountdiscount. The exercising of the options is subject to a presence condition and performance conditions (based on the return on equity (ROE) of the Group) that vary depending on the plan and beneficiary category. As of 2011, all options granted are subject to performance conditions. Subject to the presence condition and applicable performance conditions being applied. For the option plans established after 2002,met, options may only be exercised after an initial 2-yeartwo-year vesting period and the shares issued upon exercise may not be transferred priorare subject to the termination of an additional 2-yeara two-year mandatory holding period. ForHowever, for the 2007 2008 and 2009 share subscriptionto 2011 option plans, options awarded to beneficiaries employed by non-French subsidiaries at the transfer or conversiongrant date can be converted 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 placeform or transferred after the termination2-year vesting period at the end of which the initial 2-year period.options may be exercised. Restricted share grantsPerformance shares awarded under selective plans become final after a 2-yeartwo-year vesting period, subject to a continued employmentpresence condition and a performance condition based on the ROEreturn on equity (ROE) of the Group. This performance condition is defined in advance by the Board of Directors on recommendations by the Compensation Committee. At the end of this vesting period, and subject toprovided that the conditions set are satisfied, the restrictedperformance share grants become final.are finally awarded. However, these shares may not be transferred prior to the end of an additional 2-yeartwo-year mandatory holding period. For beneficiaries employed by non-French subsidiaries on the grant date, the vesting period for performance shares
For the 2009 restricted share grant, the Board
may be increased to four years; in such cases, there would be no mandatory holding period. As of Directors required that, for each beneficiary of more than 1002011, all performance shares half of the shares in excess of this number will be finally granted to executive officers are subject to a performance condition. This condition is based on the average ROE 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:conditions. is equal to zero if the average ROE is less than or equal to 7%;
varies on a straight-line basis between 0% and 100% if the average ROE is more than 7% and less than 18%; and
is equal to 100% if the average ROE is more than or equal to 18%.
For the 2007 and 2008 Plans, the performance condition stated that the restricted shares finally granted was
based on the ROE of the Group related to the fiscal year preceding the year of the final grant. The acquisition rate:
is equal to zero if the ROE is less than or equal to 10%;
varies on a straight-line basis between 0% and 80% if the ROE is more than 10% or less than 18%;
varies on a straight-line basis between 80% and 100% if the ROE is more than or equal to 18% or less than 30%; and
is equal to 100% if the ROE is more than or equal to 30%.
The grant of these options or restrictedperformance shares is used to complement,extend, based upon individual performance assessments at the time of each plan, the Group-wide policy of developing employee shareholding (including savings plans,(for further information, see “— Employees and capital increases reservedShare Ownership — Arrangements for employees) which allowsinvolving employees in the Company’s share capital” below). Stock options and performance share grants to be more closely associated with the financialChairman and share priceChief Executive Officer are subject to specific performance of TOTAL.conditions set out below. Grants to the Chairman theand Chief Executive Officer The Chairman and Chief Executive OfficersOfficer 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 provisions of French law No. 2006-1770 of December 30, 2006,Commercial Code, the Board of Directors decided that, for the 2007 2008 and 2009to 2011 share subscription option plans, the corporate officers (the Chairman of the Board and the Chief Executive Officer, will haveand 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 related contributions,other deductions, resulting from the exercise of stock options under these plans. Once the Chairman and the Chief Executive Officer holdholds a number of shares (including shares(directly or interests inthrough collective investment funds invested in Company securities)stock) corresponding to more than five times theirhis current gross annual fixed salary,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. TheAs 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 wasdecided 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 anyto date, and on the shares he holds. 2011 share subscription options under the 2008 and 2009 plans. In addition, the Chairman of theoption 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 the Chief Executive Officer were not granted any restricted shares under the 2006, 2007, 2008 and 2009 plans.
As part of the 2009 share subscription option plan, the Board of Directors required 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 first performance condition states that the number of options finally granted is based on the average ROE of the Group as published by TOTAL.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 | | Group’soptions 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 20092010 and 2010.2011. 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 second 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%. In addition, as part
The acquisition rate applicable to the subscription options that were subject to the performance condition of the 2009 Plan was 100%. 2011 performance share subscription option plan, theplan:The Board of Directors requireddecided that, for each beneficiary other thanprovided the CEOpresence condition within the Group is satisfied, the number of more than 25,000 options, one thirdshares finally granted to the Chairman and Chief Executive Officer will be subject to two performance conditions: For 50% of the optionsshares granted, in excessthe performance condition states that the number of this number will beshares finally granted subject to a performance condition. This condition is based on the average ROE of the Group as published by TOTAL.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 Group’saverage 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 20092010 and 2010.2011. 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%. As part of the 2007 and 20082009 share subscription option plans,plan:The Board of Directors decided that, provided the Board required that,presence condition within the Group was met, for each beneficiary, other than the Chief Executive Officer, of more than 25,000 options, one thirdone-third of the options granted in excess of this number will be finally granted subject to a performance condition. This performance condition states that the final acquisition rate is based on the average ROE of the Group.Group as published by TOTAL. The average ROE is calculated based on the Group’s consolidated accountsbalance 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 TOTALthe Group and relatedcalculated 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 year preceding the final grant.years 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 more than 10% or7% and less than 18%; varies on a straight-line basis between 80% and 100% if the ROE is more than or equal to 18% or less than 30%; and
is equal to 100% if the average ROE is more than or equal to 30%18%. 2010 performance share plan: The Board of Directors decided that, provided that the presence condition within the Group is satisfied, for each beneficiary of more than 100 shares, half of the shares in excess of this number will be finally granted subject to a performance condition. This condition is based on the average ROE calculated by the Group based on TOTAL’s consolidated balance sheet and statement of income for fiscal years 2010 and 2011. The acquisition rate: is equal to zero if the average ROE is less than or equal to 7%; varies on a straight-line basis between 0% and 100% if the average ROE is more than 7% and less than 18%; and is equal to 100% if the average ROE is more than or equal to 18%. 2009 performance share plan: The Board of Directors decided that, provided that the presence condition within the Group is satisfied, for each beneficiary of more than 100 shares, half of the shares in excess of this number will be finally granted subject to a performance condition. This condition is based on the average ROE of the Group as published by TOTAL. The average ROE is calculated based on the Group’s consolidated balance sheet and statement of income for fiscal years 2009 and 2010. The acquisition rate: is equal to zero if the average ROE is less than or equal to 7%; varies on a straight-line basis between 0% and 100% if the average ROE is more than 7% and less than 18%; and is equal to 100% if the average ROE is more than or equal to 18%. Due to the application of the performance condition, the acquisition rate was 100% for the 2009 Plan. In addition, the Board of Directors decided at its meeting of May 21, 2010 to implement a global free share plan intended for the Group’s employees, that is more than 100,000 employees. On June 30, 2010, rights to twenty-five free shares were granted to every employee. The shares are subject to a vesting period of two to four years depending on the case. The shares granted are not subject to any performance condition. They will be issued at the end of the vesting period. SUMMARY OF COMPENSATION, STOCK OPTIONS AND RESTRICTEDPERFORMANCE SHARES GRANTEDAWARDED TO THE CHAIRMAN AND THE CHIEF EXECUTIVE OFFICER | | | | | For the year ended December 31, (€) | | 2009 | | 2008 | Thierry Desmarest Chairman of the Board of Directors | | | | | | | | Compensation(a) | | 1,971,852 | | 2,069,430 | Value of options granted(b) | | — | | — | Value of restricted shares granted(c) | | — | | — | Total | | 1,971,852 | | 2,069,430 | Christophe de Margerie Chief Executive Officer | | | | | | | | Compensation(a) | | 2,673,771 | | 2,808,395 | Value of options granted(d) | | 1,676,000 | | 998,000 | Value of restricted shares granted(c) | | — | | — | Total | | 4,349,771 | | 3,806,395 |
| | | | | | | | | 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 table “— Compensationfollowing table. For the 2010 fiscal year, Mr. de Margerie received compensation of€1,030,359 as Chief Executive Officer for the period from January 1 to May 21, 2010, and compensation of€1,977,763 as Chairman and the Chief Executive Officer”.Officer for the period from May 22 to December 31, 2010. |
(b) | The ChairmanMr. de Margerie has the use of a company car; he receives the Board was not granted any share subscription options as part ofhealth coverage provided for Group employees and is eligible for the 2008life insurance plan open to the Group’s executive officers (see “— Pensions and 2009 plans.other commitments”). |
(c) | The Chairman and Chief Executive Officer were not granted any restricted shares as part of the 2008 and 2009 plans. |
(d) | Options grantedawarded in 20092011 are detailed in the table “— Stock“Stock options grantedawarded in 20092011 to the Chairman and the Chief Executive Officer”. The value of options grantedawarded was calculated on the day when they were grantedawarded using the Black-Scholes model based on the assumptions used for the consolidated accounts (see Note 25 to the Consolidated Financial Statement)Statements). |
(d) | The value of performance shares was calculated on the day when they were awarded. |
COMPENSATION OF THE CHAIRMAN AND THE CHIEF EXECUTIVE OFFICEROFFICER’S COMPENSATION
| | | For the year ended 2009 | | For the year ended 2008 | | For the year ended 2011 | | | For the year ended 2010 | | (€) | | Amount due for 2009 | | Amount paid in 2009(a) | | Amount due for 2008 | | Amount paid in 2008(a) | | Thierry Desmarest Chairman of the Board of Directors | | | Fixed compensation | | 1,100,000 | | 1,100,000 | | 1,100,000 | | 1,100,000 | | Variable compensation(b) | | 871,852 | | 969,430 | | 969,430 | | 1,112,199 | | Extraordinary compensation | | — | | — | | — | | — | | Directors’ fees | | — | | — | | — | | — | | In-kind benefits | | — | | — | | — | | — | | Total | | 1,971,852 | | 2,069,430 | | 2,069,430 | | 2,212,199 | | Christophe de Margerie | | | | | | | | | | Chief Executive Officer | | | | | | | | | | | 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 | | 1,310,000 | | 1,310,000 | | 1,250,000 | | 1,250,000 | | | 1,500,000 | | | | 1,500,000 | | | | 1,426,452 | (b) | | | 1,426,452 | (b) | Variable compensation(c) | | 1,356,991 | | 1,552,875 | | 1,552,875 | | 1,496,335 | | | 1,530,000 | | | | 1,581 670 | | | | 1,581,670 | (d) | | | 1,356,991 | | Extraordinary compensation | | — | | — | | — | | — | | | — | | | | — | | | | — | | | | — | | Directors’ fees | | — | | — | | — | | — | | | — | | | | — | | | | — | | | | — | | In-kind benefits(d) | | 6,780 | | 6,780 | | 5,520 | | 5,520 | | In-kind benefits(e) | | | | 6,991 | | | | 6,991 | | | | 6,908 | | | | 6,908 | | Total | | 2,673,771 | | 2,869,655 | | 2,808,395 | | 2,751,855 | | | 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) | The variableIncludes a fixed portion of€507,097 for the Chairman is calculated by taking into accountperiod between January 1 and May 21, 2010 and€919,355 for 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 governanceperiod between May 22 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 mostly met in 2009.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 140%165% of the fixed base salary, which may be increased up to 165% for exceptional performance.salary. The objectives related to personal contribution were considered to be mostly met in 2009.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.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, 1st1st and 2nd2nd paragraphs): | | | | | | | (€) | | 2009 | | | 2008 | | Thierry Desmarest | | | (a) | | | (a) | Christophe de Margerie | | | (a) | | | (a) | Patrick Artus | | 27,656 | (b) | | — | | Patricia Barbizet | | 94,192 | (c) | | 39,651 | (d) | Daniel Boeuf | | 272,143 | (e) | | 173,910 | (e) | Daniel Bouton | | 60,000 | | | 40,000 | | Bertrand Collomb | | 75,000 | | | 55,000 | | Paul Desmarais Jr. | | 48,000 | | | 48,000 | | Bertrand Jacquillat | | 95,000 | | | 90,000 | | Antoine Jeancourt-Galignani | | 46,013 | (f)(g) | | 95,000 | | Anne Lauvergeon | | 45,000 | | | 45,000 | | Peter Levene of Portsoken | | 69,000 | | | 41,000 | | Claude Mandil | | 55,000 | | | 27,568 | (d) | Michel Pébereau | | 70,000 | | | 70,000 | | Thierry de Rudder | | 116,000 | | | 116,000 | | Serge Tchuruk | | 154,379 | (h) | | 143,427 | (h) | Pierre Vaillaud | | 80,773 | (f)(i) | | 186,873 | (i) |
| | | | | | | | | 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) | For the ChairmanMember of the Board of Directors and the Chief Executive Officer, see summary tables “— Summary of compensation, stock options 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.Strategic Committee. |
(b) | Appointed as a director on May 15, 2009.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) | ChairpersonMember of the AuditCompensation Committee since July 28, 2009.May 21, 2010. |
(d) | AppointedIncluding 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 a director onChairman of the Board of Directors up to May 16, 2008.21, 2010 (€751,407), the retirement benefit (€492,963) and pension benefits received (€320,341). |
(a)(e) | Director since May 21, 2010. |
(f) | Including for 2011, the directors’ fees received, representing€58,500, as well as the compensation received from Total Raffinage Marketing (a subsidiary of TOTAL S.A.), representing€123,910.48 in 200897,865 and including for 2010, directors’ fees received, representing€212,143 in 2009.32,328 as well as the compensation received from Total Raffinage Marketing, representing€ |
(f) | Director until May 15, 2009.95,601. |
(g) | ChairmanDirector and member of the Audit Committee untilfrom May 15, 2009.13, 2011. |
(h) | Including pension payments related to previous employment byDirector and member of the Group, which amounted to€73,427 in 2008 and€74,379 in 2009.Audit Committee until May 13, 2011. |
(i) | Including pension payments related to previous employment by the Group, which amounted to€141,873 in 2008 and€53,431 in 2009.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. STOCK OPTIONS GRANTEDAWARDED IN 20092011 TO THE CHAIRMAN AND THE CHIEF EXECUTIVE OFFICER The stock options awarded to the Chairman and Chief Executive Officer are detailed in the table “TOTAL stock options awarded to Mr. de Margerie, Chairman and Chief Executive Officer of TOTAL S.A.” below. | | | | | | | | | | | | | | | Date of plan | | Type of options | | Value of options (€)(a) | | Number of options granted during fiscal year(b) | | Exercise price (€) | | Exercise period | Thierry Desmarest | | 2009 Plan | | Subscription options | | — | | — | | — | | — | Chairman of the Board of Directors | | 09/15/2009 | | | | | | | | | | | Total | | | | | | — | | — | | | | | Christophe de Margerie | | 2009 Plan | | Subscription options | | 1,676,000 | | 200,000 | | 39.90 | | 09/16/2010 | Chief Executive Officer | | 09/15/2009 | | | | | | | | | | 09/15/2017 | Total | | | | | | 1,676,000 | | 200,000 | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | 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 grantedawarded was calculated on the day they were grantedawarded using the Black-Scholes model based on the assumptions used for the consolidated accounts (see Note 25 to the Consolidated Financial Statement)Statements). |
(b) | As part of the share subscription option plan awarded on September 15, 2009,14, 2011, the Board of Directors requireddecided that, for the Chairman and Chief Executive Officer, the number of share subscription options finally granted after a 2-yearthat are likely to be exercised at the end of the two-year vesting period will be subject to performance conditions.conditions being met (see “— Grants to the Chairman and Chief Executive Officer”). |
STOCK OPTIONS EXERCISED IN 20092011 BY THE CHAIRMAN AND THE CHIEF EXECUTIVE OFFICER
The stock options awarded to the Chairman and Chief Executive Officer are detailed in the table “TOTAL stock options awarded to Mr. de Margerie, Chairman and Chief Executive Officer of TOTAL S.A.” below. | | | | | | | | | Date of plan | | Number of options exercised during fiscal year | | Exercise price (€) | Thierry Desmarest | | 2002 Plan | | 45,000 | | 39.03 | Chairman of the Board of Directors | | 07/09/2002 | | | | | Total | | | | 45,000 | | | Christophe de Margerie Chief Executive Officer | | —
— | | —
— | | — — | Total | | | | — | | |
| | | | | | | | | | | | | Date of Plan | | Number of options exercised during fiscal year | | | Exercise price (€) | | Christophe de Margerie | | 2003 Plan | | | 113,576 | | | | 32.84 | | Chairman and Chief Executive Officer | | 07/16/2003 | | | | | | | | | Total | | | | | 113,576 | | | | | |
RESTRICTED SHARE GRANTSPERFORMANCE SHARES AWARDED IN 20092011 TO THE CHAIRMAN THEAND
CHIEF EXECUTIVE OFFICER OR ANY DIRECTOR (CONDITIONAL AWARD) | | | | | | | | | | | | | | | | | | | | | | | | | 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) | DateThe value of plan | | Number ofperformance shares
granted during
fiscal year | | Value of
shares
granted (€) | | Acquisition
date | | Availability
date | | Performance
condition was calculated on the day when they were awarded. | Thierry Desmarest
Chairman of the Board of Directors
| | 2009 Plan
09/15/2009
| | — | | — | | — | | — | | — | Christophe de
Margerie
Chief Executive Officer
| | 2009 Plan
09/15/2009 | | — | | — | | — | | — | | — | Daniel Boeuf
Director representing the employee shareholders
| | 2009 Plan
09/15/2009 | | — | | — | | — | | — | | — | Total
| | | | — | | — | | | | | | |
RESTRICTEDPERFORMANCE SHARES FINALLY GRANTEDAWARDED IN 2009 TO2011 FOR THE CHAIRMAN THE
AND CHIEF EXECUTIVE OFFICER OR ANY DIRECTOR | | | | | | | | | | | | | Date of planPlan | | Number of shares finally awarded during fiscal year | | | Number of shares
finally granted during
fiscal year(a) | | Acquisition condition | | Thierry Desmarest
Chairman of the Board of Directors
| | 2007 Plan
07/17/2007
| | — | | — | | Christophe de Margerie | | 2009 Plan | | | — | | | | — | | Chairman and Chief Executive Officer | | 2007 Plan
07/17/2007 09/15/2009 | | — | | — | | | | | Daniel BoeufClaude Clément
| | 2009 Plan | | | | | | | — | | Director representing the employee shareholders | | 2007 Plan
07/17/2007 09/15/2009 | | 432 | — | | (b | ) | | | Total | | | | 432 | — | | | |
(a)— | Shares finally granted to the beneficiaries after a 2-year vesting period, i.e. on July 18, 2009. |
(b) | The acquisition rate, connected to the performance condition, was 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 18, 2011. |
TOTAL stock options plansSTOCK OPTION GRANTS The following table gives a breakdown of stock options awarded by category of beneficiaries (executive(main executive officers, senior managersother executive officers and other employees) for the plans in effect during 2009.2011. | | | | | | | | | | | | | | | | Number of beneficiaries | | Number of options awarded(a) | | Percentage | | | Average number of options per beneficiary(a) | 2001 Plan(b)(c): | | | | | | | | | | | | Purchase options | | Executive Officers(d) | | 21 | | 295,350 | | 11.0 | % | | 14,064 | Decision of the Board on July 10, 2001 Exercise price:€168.20; discount: 0.0% Exercise price as of May 24, 2006:€41.47(a) | | 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(e)(c): | | | | | | | | | | | | Purchase options | | Executive Officers(d) | | 28 | | 333,600 | | 11.6 | % | | 11,914 | Decision of the Board on July 9, 2002 Exercise price:€158.30; discount: 0.0% Exercise price as of May 24, 2006:€39.03(a) | | 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(e)(c): | | | | | | | | | | | | Subscription options | | Executive Officers(d) | | 28 | | 356,500 | | 12.2 | % | | 12,732 | Decision of the Board on July 16, 2003 Exercise price:€133.20; discount: 0.0% Exercise price as of May 24, 2006:€32.84(a) | | 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(e): | | | | | | | | | | | | Subscription options | | Executive Officers(d) | | 30 | | 423,500 | | 12.6 | % | | 14,117 | Decision of the Board on July 20, 2004 Exercise price:€159.40; discount: 0.0% Exercise price as of May 24, 2006:€39.30(a) | | 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(e): | | | | | | | | | | | | Subscription options | | Executive Officers(d) | | 30 | | 370,040 | | 24.3 | % | | 12,335 | Decision of the Board on July 19, 2005 Exercise price:€198.90; discount: 0.0% Exercise price as of May 24, 2006:€49.04(a) | | 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(e): | | | | | | | | | | | | Subscription options | | Executive Officers(d) | | 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 | 2007 Plan(e)(f)(g): | | | | | | | | | | | | Subscription options | | Executive Officers(d) | | 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)(f): | | | | | | | | | | | | Subscription options | | Executive Officers(d) | | 26 | | 1,227,500 | | 27.6 | % | | 47,212 | Decision of the Board 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 |
| | | | | | | | | | | | | | | | Number of beneficiaries | | Number of options awarded(a) | | Percentage | | | Average number of options per beneficiary(a) | | | | | | | 2009 Plan(e)(f): | | | | | | | | | | | | Subscription options Decision of the Board on September 15, 2009 Exercise price:€39.90; discount: 0.0% | | Executive Officers(d) | | 26 | | 1,201,500 | | 27.4 | % | | 46,211 | | Senior managers Other employees | | 284
1,742 | | 1,825,540
1,360,460 | | 41.6
31.0 | %
% | | 6,428
781 | | | Total | | 2,052 | | 4,387,500 | | 100 | % | | 2,138 |
| | | | | | | | | | | | | | | | | | | | | | | 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 Articles 174-9, 174-12 and 174-13 of Decree number 67-236 of March 23, 1967, effective at that time and as ofthe provisions in effect on the date of the shareholders’ meetingShareholders’ Meeting on May 12, 2006, at its meeting of March 14, 2006, the Board of Directors resolved to adjust the rights of holders of TOTAL stock options.options holders. For each plan and each holder, the exercise prices for TOTAL stock options were multiplied by 0.986147 and the number of unexercised stock options was multiplied by 1.014048 (and then rounded up), effective as of May 24, 2006. In addition, to take into account 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) | Options are exercisable after January 1, 2005, subject to a continued employment condition, and expire eight years after 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 4-year period from the date of the Board meeting awarding the options. The continued employment condition states that the termination of the employment contract will also terminate the grantee’s right to exercise the options. |
(c) | 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. |
(d)(c) | Members of the Management Committee and the Treasurer as of the date of the Board meeting awarding the options. The Chairman of the BoardMr. Desmarest has no longernot been a member of the Management Committee since February 14, 2007. The Chairman of the Board of DirectorsMr. Desmarest was grantedawarded 110,000 options inunder the 2007 Plan and no options in 2008 and 2009.since 2008. |
(e)(d) | OptionsThe options are exercisable, subject to a continued employmentpresence condition, after a 2-year vesting period from the date of the Board meeting awarding the options (except for the 2008 plan) and expire eight years after this date. The underlying shares may not be transferred during the 4-year period from the date of the Board meeting awarding the options.options (except for the 2008 Plan). The continued employmentpresence condition states that the termination of the employment contract will also terminateresult in the grantee’semployee losing the right to exercise the options. |
(f)(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 formfrom the date of the grant. |
(f) | For the 2008 Plan, the options acquisition rate, linked to the performance condition, was 60%. |
(g) | For the 2007 plan,2009 Plan, the options acquisition rate, connectedlinked to the performance condition, was 100%. |
TOTAL STOCK OPTIONS AS OF DECEMBER 31, 20092011 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 2001 Plan | | | 2002 Plan | | | 2003 Plan | | | 2004 Plan | | | 2005 Plan | | | 2006 Plan | | | 2007 Plan | | | 2008 Plan | | | 2009 Plan | | | Total | | Type of options | | Purchase options | | | Purchase options | | | Subscription options | | | Subscription options | | | Subscription options | | | Subscription options | | | Subscription options | | | Subscription options | | | Subscription options | | | | | Date of the Shareholders’ Meeting | | May 17, 2001 | | | May 17, 2001 | | | May 17,
2001 |
| | May 14,
2004 |
| | May 14,
2004 |
| | May 14,
2004 |
| | May 11,
2007 |
| | May 11,
2007 |
| | May 11,
2007 |
| | | | Date of the award(a) | | July 10, 2001 | | | July 9, 2002 | | | July 16, 2003 | | | July 20, 2004 | | | July 19, 2005 | | | July 18, 2006 | | | July 17, 2007 | | | October 9, 2008 | | | September 15, 2009 | | | | | Total number of options granted, including(b): | | 10,773,500 | | | 11,483,400 | | | 11,741,224 | | | 13,462,520 | | | 6,104,480 | | | 5,727,240 | | | 5,937,230 | | | 4,449,810 | | | 4,387,500 | | | 74,066,904 | | • directors(c) | | 300,000 | | | 240,000 | | | 240,000 | | | 240,000 | | | 240,720 | | | 400,720 | | | 310,840 | | | 200,660 | | | 200,000 | | | 2,372,940 | | • T. Desmarest | | 300,000 | | | 240,000 | | | 240,000 | | | 240,000 | | | 240,000 | | | 240,000 | | | 110,000 | | | — | | | — | | | 1,610,000 | | • C. de Margerie | | n/a | | | n/a | | | n/a | | | n/a | | | n/a | | | 160,000 | | | 200,000 | | | 200,000 | | | 200,000 | | | 760,000 | | • D. Boeuf | | 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) | | 113,704 | | | 165,672 | | | 163,180 | | | 196,448 | | | 90,280 | | | — | | | — | | | — | | | — | | | 729,284 | | Date as of which the options may be exercised | | January 1, 2005 | | | July 10, 2004 | | | July 17, 2005 | | | July 21, 2006 | | | July 20, 2007 | | | July 19, 2008 | | | July 18, 2009 | | | October 10, 2010 | | | September 16, 2011 | | | | | Expiration date | | July 10, 2009 | | | July 9, 2010 | | | July 16, 2011 | | | July 20, 2012 | | | July 19, 2013 | | | July 18, 2014 | | | July 17, 2015 | | | October 9, 2016 | | | September 15, 2017 | | | | | Exercise price (€)(e) | | 41.47 | | | 39.03 | | | 32.84 | | | 39.30 | | | 49.04 | | | 50.60 | | | 60.10 | | | 42.90 | | | 39.90 | | | | | Cumulative number of options exercised as of December 31, 2009 | | 6,156,019 | | | 5,615,101 | | | 4,996,833 | | | 908,976 | | | 38,497 | | | 8,620 | | | — | | | — | | | — | | | | | Cumulative number of options cancelled as of December 31, 2009 | | 4,747,185 | | | 98,710 | | | 95,942 | | | 278,283 | | | 105,223 | | | 72,934 | | | 65,565 | | | 8,180 | | | 10,610 | | | | | Number of options: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | • outstanding as of January 1, 2009 | | 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 | | • granted in 2009(f) | | — | | | — | | | — | | | — | | | — | | | — | | | — | | | — | | | 4,387,620 | | | 4,387,620 | | • cancelled in 2009 | | (4,650,446 | ) | | (7,920 | ) | | (8,020 | ) | | (18,387 | ) | | (6,264 | ) | | (5,370 | ) | | (13,780 | ) | | (2,180 | ) | | (10,610 | ) | | (4,722,977 | ) | • exercised in 2009 | | (40,980 | ) | | (507,676 | ) | | (681,699 | ) | | (253,081 | ) | | — | | | — | | | — | | | — | | | — | | | (1,483,436 | ) | • outstanding as of December 31, 2009 | | — | | | 5,935,261 | | | 6,811,629 | | | 12,495,709 | | | 6,185,440 | | | 5,645,686 | | | 5,871,665 | | | 4,441,630 | | | 4,377,010 | | | 51,764,030 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 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 of the award is the date of the Board meeting awarding the options, except for the share subscription option plan of October 9, 2008, decidedapproved 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 award.grant. |
(d) | Adjustments approved by the Board onat its meeting on March 14, 2006, pursuant to Articles 174-9, 174-12 and 174-13 of Decree No. 67-236 dated March 23, 1967the provisions in effect at the time of the Board meeting as well asand at the time of the Shareholders’ Meeting on May 12, 2006, related to the spin-off of Arkema. These adjustments have beenwere made on May 22, 2006 with an effective dateas of May 24, 2006. |
(e) | Exercise price as of May 24, 2006. ToThe exercise prices of TOTAL subscription shares under the plans in force at that date were multiplied by 0.25 to take into account the four-for-one stock split that took place on May 18, 2006, the exercise price of stock options from plans then effective has been divided by four. In addition, to take into account2006. Moreover, following the spin-off of Arkema, the exercise priceprices of TOTAL stock options wasunder these plans were multiplied by an adjustment ratio offactor equal to 0.986147 effective as of May 24, 2006. ExerciseThe exercise prices prior toeffective before May 24, 2006 are showngiven in Note 25, points A, B and C to the Consolidated Financial Statements. |
(f) | ForOut of the 2007930,089 options canceled in 2011, 738,534 options that were not exercised expired due to the expiry of the 2003 subscription option plan the optionson July 16, 2011. |
(g) | The acquisition rate connectedapplicable 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, 20092011 were exercised, the corresponding shares would represent 2.16%1.85%(1)of the Company’s potential share capital as of such date. 1.(1) | Out of a total potential share capital of 2,394,251,6532,408,400,225 shares. |
TOTAL STOCK OPTIONS AWARDED TO MAIN EXECUTIVE OFFICERS (MANAGEMENT COMMITTEE AND TREASURER) AS OF DECEMBER 31, 20092011 | | | | | | | | | | | | | | | | | | | | | | | | | | 2001 Plan | | 2002 Plan | | 2003 Plan | | | 2004 Plan | | | 2005 Plan | | 2006 Plan | | 2007 Plan | | 2008 Plan | | 2009 Plan | | Total | | Type of options | | Purchase options | | Purchase options | | Subscription options | | | Subscription options | | | Subscription options | | Subscription options | | Subscription options | | Subscription options | | Subscription options | | | | Expiration date | | July 10, 2009 | | July 9, 2010 | | July 16, 2011 | | | July 20, 2012 | | | July 19, 2013 | | July 18, 2014 | | July 17 2015 | | October 9, 2016 | | September 15, 2017 | | | | Exercise price (€)(a) | | 41.47 | | 39.03 | | 32.84 | | | 39.30 | | | 49.04 | | 50.60 | | 60.10 | | 42.90 | | 39.90 | | | | Options granted by the Board(b) | | 492,000 | | 560,200 | | 635,704 | | | 796,800 | | | 689,680 | | 823,720 | | 1,000,840 | | 1,101,200 | | 1,169,800 | | 7,269,944 | | Adjustments related to the spin-off of Arkema(c) | | 3,254 | | 7,568 | | 8,120 | | | 11,248 | | | 9,608 | | — | | — | | — | | — | | 39,798 | | Options outstanding as of January 1, 2009 | | 182,268 | | 243,232 | | 338,337 | | | 795,048 | | | 699,416 | | 823,720 | | 1,000,840 | | 1,101,200 | | — | | 5,184,061 | | Options awarded in 2009(d) | | — | | — | | — | | | — | | | — | | — | | — | | — | | 1,169,800 | | 1,169,800 | | Options exercised in 2009 | | — | | — | | (47,000 | ) | | (90,000 | ) | | — | | — | | — | | — | | — | | (137,000 | ) | Options outstanding as of December 31, 2009 | | — | | 243,232 | | 291,337 | | | 705,048 | | | 699,416 | | 823,720 | | 1,000,840 | | 1,101,200 | | 1,169,800 | | 6,034,593 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 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. ToThe 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 that took place on May 18, 2006, the exercise price of stock options from plans then effective has been divided by four. In addition, to take into account2006. Moreover, following the spin-off of Arkema, the exercise priceprices of TOTAL stock options wasunder these plans were multiplied by an adjustment ratio offactor equal to 0.986147 effective as of May 24, 2006. ExerciseThe exercise prices prior toeffective before May 24, 2006 are showngiven in Note 25, points A, B and C to the Consolidated Financial Statements. |
(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 onat its meeting on March 14, 2006, pursuant to Articles 174-9, 174-12 and 174-13 of Decree No. 67-236 dated March 23, 1967the 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 have beenwere made on May 22, 2006 with an effective dateas of May 24, 2006. |
(d) | The number of options awarded in 2009 to executive officers, having this title as of December 31, 2009, does not match the amount shown in the table “— TOTAL stock options as of December 31, 2009”, due to changes among the executive officers after the date the Board decided the share option plan. |
As part of the 2007, 2008 and 2009 share subscription option plans, the Board of Directors requireddecided that for each beneficiary of more than 25,000 options, one thirdone-third of the options grantedawarded in excess of this number be subject to a performance condition. For the 20072010 share subscription option plan, beneficiaries of more than 3,000 options are subject to a performance condition for part of the options acquisition rate, connected(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, was 100%.condition. In addition, Mr. Daniel Boeuf,Clément, the director representing employee shareholders, has not exercised any option in 20092011 and has not been awarded any share subscription option byoptions under the 2009 plan.2011 Plan. TOTAL STOCK OPTIONS AWARDED TO MR. THIERRY DESMAREST,DE MARGERIE, CHAIRMAN OF THE BOARDAND CHIEF EXECUTIVE OFFICER OF TOTAL S.A. | | | | | | | | | | | | | | | | | | | | | | | | | 2001 Plan | | 2002 Plan | | | 2003 Plan | | 2004 Plan | | 2005 Plan | | 2006 Plan | | 2007 Plan | | 2008 Plan | | 2009 Plan | | Total | | Type of options | | Purchase options | | Purchase options | | | Subscription options | | Subscription options | | Subscription options | | Subscription options | | Subscription options | | Subscription options | | Subscription options | | | | Expiration date | | July 10, 2009 | | July 9, 2010 | | | July 16, 2011 | | July 20, 2012 | | July 19, 2013 | | July 18, 2014 | | July 17,
2015 | | October 9, 2016 | | September 15, 2017 | | | | Exercise price (€)(a) | | 41.47 | | 39.03 | | | 32.84 | | 39.30 | | 49.04 | | 50.60 | | 60.10 | | 42.90 | | 39.90 | | | | Options granted by the Board(b) | | 300,000 | | 240,000 | | | 240,000 | | 240,000 | | 240,000 | | 240,000 | | 110,000 | | — | | — | | 1,610,000 | | Adjustments related to the spin-off of Arkema(c) | | 2,532 | | 3,372 | | | 2,476 | | 3,372 | | 3,372 | | — | | — | | — | | — | | 15,124 | | Options outstanding as of January 1, 2009 | | — | | 70,372 | | | — | | 243,372 | | 243,372 | | 240,000 | | 110,000 | | — | | — | | 907,116 | | Options awarded in 2009 | | — | | — | | | — | | — | | — | | — | | — | | — | | — | | — | | Options exercised in 2009 | | — | | (45,000 | ) | | — | | — | | — | | — | | — | | — | | — | | (45,000 | ) | Options outstanding as of December 31, 2009 | | — | | 25,372 | | | — | | 243,372 | | 243,372 | | 240,000 | | 110,000 | | — | | — | | 862,116 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 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. ToThe 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 that took place on May 18, 2006, the exercise price of stock options from plans then effective has been divided by four. In addition, to take into account2006. Moreover, following the spin-off of Arkema, the exercise priceprices of TOTAL stock options wasunder these plans were multiplied by an adjustment ratio offactor equal to 0.986147 effective as of May 24, 2006. ExerciseThe exercise prices prior toeffective before May 24, 2006 are showngiven in Note 25, points A, B and C to the Consolidated Financial Statements.Statements (chapter 9). |
(b) | The number of options awarded before May 23, 2006, has been multiplied by four to take into account the four-for-one stock split approved by the Shareholders’ Meeting on May 12, 2006. |
(c) | Adjustments approved by the Board onat its meeting on March 14, 2006, pursuant to Articles 174-9, 174-12 and 174-13 of Decree No. 67-236 dated March 23, 1967the 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 have beenwere made on May 22, 2006 with an effective dateas of May 24, 2006. |
As part of the 2007 plan,to 2011 Plans, the Board has conditionedmade the awardgrant of these options to the Chairman ofand Chief Executive Officer subject to performance conditions (see “— Grants to the Board on the fulfillment of a performance condition.Chairman and Chief Executive Officer”). For the 2007 plan,2009 Plan, the options acquisition rate, connectedlinked to the performance condition,conditions, was 100%. The Chairman of the Board of Directors’ outstanding options asAs of December 31, 2009, represent 0.036%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.(1) | Out of a total potential share capital of 2,394,251,653 shares. |
TOTAL STOCK OPTIONS AWARDED TO MR. CHRISTOPHE DE MARGERIE, CHIEF EXECUTIVE OFFICER OF TOTAL S.A.
| | | | | | | | | | | | | | | | | | | | | | | 2001 Plan | | 2002 Plan | | 2003 Plan | | 2004 Plan | | 2005 Plan | | 2006 Plan | | 2007 Plan | | 2008 Plan | | 2009 Plan | | Total | Type of options | | Purchase options | | Purchase options | | Subscription options | | Subscription options | | Subscription options | | Subscription options | | Subscription options | | Subscription options | | Subscription options | | | Expiration date | | July 10, 2009 | | July 9, 2010 | | July 16, 2011 | | July 20, 2012 | | July 19, 2013 | | July 18, 2014 | | July 17, 2015 | | October 9, 2016 | | September 15, 2017 | | | Exercise price (€)(a) | | 41.47 | | 39.03 | | 32.84 | | 39.30 | | 49.04 | | 50.60 | | 60.10 | | 42.90 | | 39.90 | | | Options granted by the Board(b) | | 88,000 | | 112,000 | | 112,000 | | 128,000 | | 130,000 | | 160,000 | | 200,000 | | 200,000 | | 200,000 | | 1,330,000 | Adjustments related to the spin-off of Arkema(c) | | 1,240 | | 1,576 | | 1,576 | | 1,800 | | 1,828 | | — | | — | | — | | — | | 8,020 | Options outstanding as of January 1, 2009 | | 89,240 | | 113,576 | | 113,576 | | 129,800 | | 131,828 | | 160,000 | | 200,000 | | 200,000 | | — | | 1,138,020 | Options awarded in 2009 | | — | | — | | — | | — | | — | | — | | — | | — | | 200,000 | | 200,000 | Options exercised in 2009 | | — | | — | | — | | — | | — | | — | | — | | — | | — | | — | Options outstanding as of December 31, 2009 | | — | | 113,576 | | 113,576 | | 129,800 | | 131,828 | | 160,000 | | 200,000 | | 200,000 | | 200,000 | | 1,248,780 |
(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 effective has been divided by four. In addition, to take into account the spin-off of Arkema, the exercise price of stock options was multiplied by an adjustment ratio of 0.986147, effective as of May 24, 2006. Exercise prices prior to May 24, 2006, are shown in Note 25 to the Consolidated Financial Statements. |
(b) | The number of options awarded before May 23, 2006, has been multiplied by four to take into account the four-for-one stock split approved by the Shareholders’ Meeting on May 12, 2006. |
(c) | Adjustments approved by the Board on its meeting on March 14, 2006 pursuant 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 and at the time of the Shareholders’ Meeting on May 12, 2006, related to the spin-off of Arkema. These adjustments have been made on May 22, 2006 with an effective date of May 24, 2006. |
As part of the 2007, 2008 and 2009 plans, the Board has conditioned the award of these options to the Chief Executive Officer on the fulfillment of performance conditions. For the 2007 plan, the options acquisition rate, connected to the performance condition, was 100%.
The Chief Executive Officer’ outstanding options as of December 31, 2009 represent 0.052%(1) of the Company’s potential share capital as of such date.
1. | Out of a total potential share capital of 2,394,251,6532,408,400,225 shares. |
STOCK OPTIONS AWARDED TO THE TEN EMPLOYEES (OTHER THAN DIRECTORS)CORPORATE EXECUTIVE OFFICERS) RECEIVING THE LARGEST AWARDS / AWARDS/STOCK OPTIONS EXERCISED BY THE TEN EMPLOYEES (OTHER THAN DIRECTORS)CORPORATE EXECUTIVE OFFICERS) EXERCISING THE LARGEST NUMBER OF OPTIONS | | | | | | | | | | | | Total number of options awarded/options exercised | | Exercise price (€) | | | Date of the award(a) | | Expiration date | Options awarded in 2009 to the ten employees of TOTAL S.A., or any company in the Group, receiving the largest number of options | | 659,000 | | 39.90 | | | 09/15/2009 | | 09/15/2017 | Options exercised in 2009 by the ten employees of TOTAL S.A., or any company in the Group, exercising the largest number of options(b) | | 10,000 | | 41.47 | | | 07/10/2001 | | 07/10/2009 | | 52,100 | | 39.03 | | | 07/09/2002 | | 07/09/2010 | | 115,431 | | 32.84 | | | 07/16/2003 | | 07/16/2011 | | 102,172 | | 39.30 | | | 07/20/2004 | | 07/20/2012 | | | 279,703 | | 36.66 | (c) | | | | |
| | | | | | | | | | | | | | | | | | | Total number of options awarded/exercised | | | Exercise price (€) | | | Grant date(a) | | | Expiry date | | Options awarded in 2011 to the ten employees of TOTAL S.A., or any company in the Group, receiving the largest number of options | | | 430,400 | | | | 33.00 | | | | 09/14/2011 | | | | 09/14/2019 | | Options exercised in 2011 by the ten employees of TOTAL S.A., or any company in the Group, exercising the largest number of options(b) | | | 227,671 | | | | 32.84 | | | | 07/16/2003 | | | | 07/16/2011 | | | | 9,736 | | | | 39.30 | | | | 07/20/2004 | | | | 07/20/2012 | | | | | 237,407 | | | | 33.10 | (c) | | | | | | | | |
(a) | The grant date of the award is the date of the Board meeting awarding the options. |
(b) | Exercise price as of May 24, 2006. ToThe exercise prices of TOTAL stock options under the plans in force at that date were multiplied by 0.25 to take into account the four-for-one stock split that took place on May 18, 2006, the exercise price of stock options from plans then effective has been divided by four. In addition, to take into account2006. Moreover, following the spin-off of Arkema, the exercise priceprices of TOTAL stock options wasunder these plans were multiplied by an adjustment ratio offactor equal to 0.986147 effective as of May 24, 2006. ExerciseThe exercise prices prior toeffective before May 24, 2006 are showngiven in Note 25, points A, B and C to the Consolidated Financial Statements. |
(c) | Weighted-average price. |
TOTAL restrictedGLOBAL 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 restrictedTOTAL performance share grants by category of grantee (executivebeneficiary (main executive officers, senior managersother executive officers and other employees). | | | Number of beneficiaries | | Number of restricted shares granted(a) | | Percentage | | Average number of restricted shares per beneficiary | | | | Number of beneficiaries | | Number of shares awarded(a) | | Percentage | | Average number of shares per beneficiary | | 2005 Plan(b) | | Executive officers(c) | | 29 | | 13,692 | | 2.4% | | 472 | | Main executive officers(c) | | | 29 | | | | 13,692 | | | | 2.4 | % | | | 472 | | Decision of the Board on July 19, 2005 | | Senior managers | | 330 | | 74,512 | | 13.1% | | 226 | | 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 | | | | | Other employees(d) | | | 6,956 | | | | 481,926 | | | | 84.5 | % | | | 69 | | | | | Total | | | 7,315 | | | | 570,130 | | | | 100 | % | | | 78 | | | 2006 Plan(b) | | Executive officers(c) | | 26 | | 49,200 | | 2.2% | | 1,892 | | Main executive officers(c) | | | 26 | | | | 49,200 | | | | 2.2 | % | | | 1,892 | | Decision of the Board on July 18, 2006 | | Senior managers | | 304 | | 273,832 | | 12.0% | | 901 | | 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 | | | | | Other employees(d) | | | 7,509 | | | | 1,952,332 | | | | 85.8 | % | | | 260 | | | | | Total | | | 7,839 | | | | 2,275,364 | | | | 100 | % | | | 290 | | | 2007 Plan(b) | | Executive officers(c) | | 26 | | 48,928 | | 2.1% | | 1,882 | | Main executive officers(c) | | | 26 | | | | 48,928 | | | | 2.1 | % | | | 1,882 | | Decision of the Board on July 17, 2007 | | Senior managers | | 297 | | 272,128 | | 11.5% | | 916 | | 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 | | Executive officers(c) | | 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(d) | | 9,028 | | 2,394,712 | | 85.8% | | 265 | | | Total | | 9,353 | | 2,791,968 | | 100% | | 299 | | 2009 Plan | | Executive officers(c) | | 25 | | 48,700 | | 1.6% | | 1,948 | | | | | 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 | | Senior managers | | 284 | | 329,912 | | 11.1% | | 1,162 | | 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 | | | | | 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 restrictedperformance shares grantedawarded shown in this table has not been recalculatedadjusted 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 2007 plans,2009 Plans, the acquisition rates of the shares granted, relatedawarded, 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 restrictedperformance shares. The Chairman of the Board and the Chief Executive Officer were not grantedawarded any restricted shares.performance shares, with the exception of the 2011 Plan. On September 14, 2011, the Board of Directors of TOTAL S.A. decided to grant 16,000 performance shares to Mr. de Margerie. |
(d) | Mr. Daniel Boeuf,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 416 restricted shares in 2005, 416 restricted shares in 2006, 432 restricted shares in 2007 and 588 shares in 2008. Mr Boeuf was not granted any restricted shares in 2009.as part of the 2010 global free share plan. |
The grant of these performance shares, previouslywhich were bought back by the Company on the market, are finally granted to their beneficiarieswill become final after a 2-year vesting period from the date of the grant.period. This final grant is subject to continued employmenta presence condition and a performance condition performances.(see “— Stock options and performance share grants policy — General policy”). Moreover, the transfer of the restrictedperformance shares will not be permitted until the end of a 2-year mandatory holding period. RESTRICTEDPERFORMANCE SHARE PLANS AS OF DECEMBER 31, 20092011
| | | | | | | | | | | | | | | | | | 2005 Plan(a) | | | 2006 Plan | | | 2007 Plan | | | 2008 Plan | | | 2009 Plan | | Date of the Shareholders’ Meeting | | 05/17/2005 | | | 05/17/2005 | | | 05/17/2005 | | | 05/16/2008 | | | 05/16/2008 | | Date of grant(b) | | 07/19/2005 | | | 07/18/2006 | | | 07/17/2007 | | | 10/09/2008 | | | 09/15/2009 | | Closing price on the date of the award(c) | | €52.13 | | | €50.40 | | | €61.62 | | | €35.945 | | | €41.615 | | Average repurchase price per share paid by the Company | | €51.62 | | | €51.91 | | | €61.49 | | | €41.63 | | | €38.54 | | Total number of restricted shares granted, including to | | 2,280,520 | | | 2,275,364 | | | 2,366,365 | | | 2,791,968 | | | 2,972,018 | | • directors(d) | | 416 | | | 416 | | | 432 | | | 588 | | | 0 | | • ten employees with largest grants(e) | | 20,000 | | | 20,000 | | | 20,000 | | | 20,000 | | | 20,000 | | Start of the vesting period: | | 07/19/2005 | | | 07/18/2006 | | | 07/17/2007 | | | 10/09/2008 | | | 09/15/2009 | | 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 | | Transfer possible from (end of the mandatory holding period) | | 07/20/2009 | | | 07/19/2010 | | | 07/18/2011 | | | 10/10/2012 | | | 09/16/2013 | | Number of restricted shares: | | | | | | | | | | | | | | | | • Outstanding as of January 1, 2009 | | — | | | — | | | 2,333,217 | | | 2,772,748 | | | | | • Granted in 2009 | | — | | | — | | | — | | | — | | | 2,972,018 | | • Cancelled in 2009 | | 1,928 | (h) | | 2,922 | (h) | | (12,418 | ) | | (9,672 | ) | | (5,982 | ) | • Finally granted in 2009(f) (g) | | (1,928 | )(h) | | (2,922 | )(h) | | (2,320,799 | ) | | (600 | ) | | — | | • Outstanding as of December 31, 2009 | | — | | | — | | | — | | | 2,762,476 | | | 2,966,036 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 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 restrictedperformance shares grantedawarded 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 of the award is the date of the Board meeting awarding the restrictedperformance share grant, except for the restrictedperformance shares awarded on October 9, 2008, decidedapproved 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) | TheMr. Desmarest, Chairman of the Board of Directors was not granted any restricted shares under the 2005, 2006, 2007, 2008of TOTAL S.A. until May 21, 2010, and 2009 plans. Furthermore, Mr. de Margerie, director of TOTAL S.A.Chief Executive Officer since May 12, 2006,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. since Februaryon July 18, 2006, July 17, 2007, September 9, 2008, September 15, 2009 and September 14, 2007,2010. Furthermore, Mr. Desmarest was not granted any restrictedawarded performance shares under the 2006, 2007, 2008 and 2009 plans. The Chief Executive Officer was finally grantedplan approved by the Board of Directors of TOTAL S.A. on July 20, 2007,19, 2005. On September 14, 2011, the 2,000 restricted shares he had been granted by the 2005 plan since he was not a directorBoard of Directors of TOTAL S.A as of the date of the grant. Furthermore,S.A. decided to grant 16,000 performance shares to Mr. de Margerie. In addition, Mr. Boeuf, the director of TOTAL S.A. representing employee.employee shareholders until December 31, 2009, was finally grantedawarded performance shares under the plans approved by the Board of Directors of TOTAL S.A. on July 19, 2005, July 18, 2009,2006, July 17, 2007 and September 9, 2008. Mr. Boeuf was not awarded any performance shares under the 432 shares he had been grantedplan approved by the 2007Board 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 and was not granted any restricted sharesapproved by the 2009 plan.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) | Employees of TOTAL S.A., or of any Group company, who were not directors of TOTAL S.A. as of the date of grant. |
(f) | For the 2008 plan,2010 Plan, final grants following the death of the beneficiary. |
(g) | For the 2007 plan, the acquisition rate, related to the performance condition, was 100%. |
(h) | RestrictedPerformance shares finally grantedawarded for which the entitlement right had been cancelledcanceled erroneously. |
In case of a final awardgrant of the outstanding restrictedperformance shares as of December 31, 2009,2011, the corresponding shares would represent 0.24%0.27%(1) of the Company’s potential share capital as of such date. 1.(1) | Out of a total potential share capital of 2,394,251,6532,408,400,225 shares. |
TOTAL RESTRICTED SHARES FINALLY GRANTED, FOLLOWINGFOLLOW-UP OF THE DECISION BY THE BOARD MEETING OF SEPTEMBER 15, 2009,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 DIRECTORS)CORPORATE EXECUTIVE OFFICERS) RECEIVING THE LARGEST NUMBER OF GRANTS / TOTAL RESTRICTED SHARE GRANTS FINALLY GRANTED FOLLOWING THE RESTRICTED SHARE PLAN APPROVED BY THE BOARD MEETING ON JULY 17, 2007, TO THE TEN EMPLOYEES (OTHER THAN DIRECTORS) RECEIVING THE LARGEST NUMBER OFPERFORMANCE SHARES | | | | | | | | | | | | | | | | | | | Restricted shareNumber of
grants / Sharesperformance shares granted/finally granted awarded | | | Date of the awardGrant date | | Date of the final grant | | Date of final grant (end of vesting period) | | | End of the mandatory holding period | | TOTAL restrictedPerformance share grants decidedapproved 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(a)
| | | 91,400 | | | | 09/14/2011 | | | | 09/15/2013 | | | | 09/15/2015 | | Performance shares finally awarded in 2011 following the performance share plan approved by the Board meeting on September 15, 2009, to the ten employees (other than directors)corporate executive officers) at the time of such approval receiving the largest amountnumber of grantsperformance shares(a)(b) | | | 20,000 | | | | 09/15/2009 | | | | 09/16/2011 | | | | 09/16/2013 | TOTAL restricted share grants finally granted in 2009 following the restricted share plan approved by the Board meeting on July 17, 2007, to the ten employees (other than directors) receiving the largest amount of shares(b)
| | 20,000 | | 07/17/2007 | | 07/18/2009 | | 07/18/2011 |
(a) | Grant approved by the Board on September 15, 2009.14, 2011. Grants of these restrictedperformance shares will become final, subject to a performance condition, after a 2-year vesting period i.e.(i.e., on September 16, 2011.15, 2013) (see “— Stock options and performance share grants policy — General policy”). Moreover, the transfer of the restrictedperformance shares will not be permitted until the end of a 2-year mandatory holding period i.e.(i.e., on September 16, 2013.15, 2015). |
(b) | Grant approved by the Board on July 17, 2007. Grants of these restricted shares will becomeThis final grant is subject to a performance condition after a 2-year vesting period, i.e. on July 18, 2009.(see “— Stock options and performance share grants policy — General policy”). The acquisition rate of the shares granted, connectedawarded, linked to the performance condition, was 100%. Moreover, the transfer of the restrictedperformance shares finally awarded will notonly be permitted untilafter the end of a 2-year mandatory holding period i.e.(i.e., from July 18, 2011.September 16, 2013). |
Elf Aquitaine share subscription options
ELF AQUITAINE STOCK OPTIONS OF EXECUTIVE OFFICERS
(MEMBERS OF THE MANAGEMENT COMMITTEE AND THE TREASURER)
AS OF DECEMBER 31, 2009
Certain executive officers of TOTAL as of December 31, 2009, who were previously with the Elf Aquitaine group hold Elf Aquitaine options that, upon exercise, benefited 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 25 to the Consolidated Financial Statements.
As of December 31, 2009, the exchange guarantee is no longer in effect and Elf Aquitaine share subscription option plans have expired. Therefore, no Elf Aquitaine shares are covered by the exchange guarantee as of December 31, 2009.
| | | Elf Aquitaine share subscription plan | | 1999 Plan n°1 | Exercise price per Elf Aquitaine share (€)(a)
| | 114.76 | Expiration date
| | 03/30/2009 | Options awarded
| | 14,880 | Adjustments related to the spin-off of S.D.A.(b)
| | 42 | Options outstanding as of January 1, 2009
| | 1,406 | Options exercised in 2009
| | 1,406 | Options outstanding as of December 31, 2009
| | — | Corresponding number of TOTAL shares, as of December 31, 2009, likely to be created pursuant to the exchange guarantee
| | — |
(a)(1) | Exercise price asOut of May 24, 2006. To take into account the spin-offa total potential share capital of S.D.A. (Société de Développement Arkema) by Elf Aquitaine, the exercise price for Elf Aquitaine share subscription options was multiplied the exercise price was multiplied by an adjustment ratio of 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 and at the time of the Shareholders’ Meeting of Elf Aquitaine on May 10, 2006, related to the spin-off of S.D.A. These adjustments have been made on May 22, 2006 with an effective date of May 24, 2006.2,408,400,225 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) (“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 on the following limited matters:
The AFEP-MEDEF Code was amended in April 2010 to make recommendations related to the balanced number of men and women sitting in Board and Committees’ meetings. The code recommends that a 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 twelve 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 onecome. At its meeting on February 8, 2012, the Nominating & Governance Committee examined current practices in the Company in view of its members considering the long-term natureAFEP-MEDEF code and concluded that the Company complied with almost all the recommendations. Mr. Thierry Desmarest, Honorary Chairman of its investmentsthe Company and operation as well asdirector, can still be entrusted with representative missions for the experience and authority of which this director is in possession, which reinforce his independence and contribute to the Board’s work. The ChairmanGroup, 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 procedure of the Board of Directors At its meeting on February 13, 2007, the Board of Directors adopted rules of procedure to replace the Directors’ Charter 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 rules of procedure specify the obligations of each director and set forth the mission and working procedures of the Board of Directors. They also define the respective responsibilities and authority of the Chairman and of the Chief Executive Officer. It is reviewed on a regular basis to match the changes in rules and practices related to governance. The principal matters covered by the rules of procedure are summarized below. An unabridged version of these rules and proceduresof procedure, which were approved by the Board of Directors of TOTAL S.A.(1), is available onherein.
Mission of the Board of Directors The mission of the Board of Directors is to determine the strategic direction of the Group and supervise the implementation of this vision. With the exception of the powers and authority expressly reserved for shareholders and within the limits of the Company’s website.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: Each director undertakes
• | | 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 Group that concern amounts greater than 3% of shareholders’ equity; reviewing information on significant events related to maintain the independenceCompany’s affairs, in particular for investments or divestments that are greater than 1% of his analysis, judgment, decision-makingshareholders’ equity; conducting audits and actionsinvestigations as well as notit 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 the shareholders and the financial markets through the financial statements that it approves and the annual reports, or when major transactions are conducted; convening and setting the agenda for Shareholders’ Meetings or meetings of bondholders; preparing, for each year, a list of the directors it deems to be 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, 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. The Chairman of the Board makes sure that the Company provides the directors with the relevant information, including criticisms, in particular financial statement reports and press releases, and the main press articles about the Company.Each directorDuty 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 company 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. |
TheBoard of Directors’ missionis to determine the strategic directionWorkings 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, in particular those defined in the AFEP-MEDEF Code; 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 orad 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 inon 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 under 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 (see above: “theand in particular the rules of procedure of the Board of Directors’ mission”),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’ 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 the highlights of the Group’s activity. Committees of the Board of Directors The Board of Directors approved the creation of: a Nominating & Governance Committee; a Compensation Committee; and 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 significant Groupits activities to the Board.Board of Directors. Committees of the Board of Directors The BoardCommittees of Directors has three specialized committees: the Audit Committee; the Compensation Committee; and the Nominating & Governance Committee. Audit Committee
The Audit Committee’s role is to assist 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 consults 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 2009,2011, the Committee’s members were Mrs.Ms. Patricia Barbizet, and Messrs. Bertrand Jacquillat andMr. Thierry de Rudder and Mr. Bertrand Jacquillat, until his term as well as, untildirector expired on May 15, 2009,13, 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. Antoine Jeancourt-Galignani. 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 wasis chaired by Mr. Antoine Jeancourt-Galignani, who was determined to be the Audit Committee financial expert by the Board at its meeting on September 5, 2006. Mrs. Patricia Barbizet was appointed by the Committee atMs. Barbizet. At its meeting on July 28, 2009, to succeed Mr. Antoine Jeancourt-Galignani for2011, the Committee chairmanship. The Board of Directors at its meeting on July 30, 2009, decided to appoint Mr. Bertrand Jacquillat Ms. Barbizet to serve as the Audit Committee financial expert based on a recommendation by the Audit Committee.
At its meeting on January 12, 2012, the Board of Directors decided to co-opt Mr. Gérard Lamarche as a director and to nominate him as a member of the Audit Committee in replacement of Mr. de Rudder, who is resigning from his position as a Director. Compensation Committee 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 the Compensation 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; and
evaluateevaluating the performance and recommendrecommending the compensation of each corporate executive officer, and
preparing reports which 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 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 2009,2011, 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 the Nominating & Governance 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; and examining ethical issues atany questions referred to it by the requestBoard 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 its Chairman.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 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 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 term of their appointment as director. The term of office as a member of the Committee may be renewed at the same time as the appointment as director. However, the Board of Directors can change the composition of the Committee at any time. Organization of activities:The Chairman of the Board of Directors of the Company chairs the Committee. The Chairman appoints the Committee secretary, who may be the Secretary of the Board of Directors. The Committee deliberates when at least one-half of its members are present. A member of the Committee cannot be represented. The Committee meets at least once a year and at the request of its Chairman, at least one-half of its members, or the Chief Executive Officer of the Company. The Committee Chairman prepares the schedule of its meetings. Directors who are not members of the Committee are free to participate in the Committee’s meetings. This voluntary participation entitles them to the same directors’ fees as those paid to the members of the Committee for attending meetings. The Committee may meet with the Chief Executive Officer, and, if applicable, any acting Managing Director of the Company and consult with managers of operating or non-operating departments, as may be useful in performing its duties. The Chairman of the Committee [, if the latter is not the Chief Executive Officer of the Company,] gives prior notice of such meeting to the Chief Executive Officer. In particular, the Committee is authorized to consult with the Vice President Strategy & Business Intelligence of the Company or the person delegated by the latter, by asking the Company’s Chief Executive Officer to call them to a meeting. If it deems it necessary to accomplish its duties, the Committee may request from the Board of Directors the resources to engage external consultants. A written summary of Committee meetings is drawn up. Report:The Committee submits written reports on its activities to the Board of Directors.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 2009,2011, the Committee’s members were Mmes. Patricia Barbizet, Barbara Kux and Anne Lauvergeon and Messrs. Bertrand Collomb,Christophe de Margerie, Thierry Desmarest, Michel PébereauGunnar Brock, Claude Mandil and Serge Tchuruk. Each, withThierry de Rudder. At its meeting on January 12, 2012, the exceptionBoard of Directors decided to co-opt Mr. Gérard Lamarche as a director and to nominate him as a member of the ChairmanStrategic 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 Board, is an independent director.Committee are free to participate in the Committee’s meetings. Mr. Thierry DesmarestChristophe de Margerie chairs the Committee. Board of Directors practices Management form On May 21, 2010, the Board of Directors decided to reunify the positions of Chairman and Chief Executive Officer and appoint the Chief Executive Officer to the duties of Chairman of the Board. This decision was made further to the work done by the Nominating & Governance Committee and in the best interests of the Company, taking into account the advantage of the unified management and the majority of independent directors appointed at the Committees, which ensures balanced authority. The Board of Directors deemed that the unified management form was the most appropriate to the Group’s organization,modus operandi and business, and the specificities of the oil and gas sector. It respects the respective prerogatives of the various Company instances (Shareholders’ meeting, Board of Directors, general management). Moreover, the Company by-laws and the respective rules of procedure of the Board of Directors and the Committees provide the guarantees required to implement best governance practices within a unified management framework. In particular, the by-laws allow the Board to nominate one or two Vice-Chairmen. They also state that the Board of Directors can be summoned by any means, even verbally, or at short notice in the event of an emergency, by the Chairman, a Vice-Chairman, or one third of the members, at any time and whenever the Company so requires. The rules of procedure of the Board of Directors also state that each Director is required to inform the Board of Directors of any conflicts of interest with the Company or with any other company in the Group, and to abstain from voting on the resolution in question, and even to refrain from taking part in the debate preceding the vote. Performance and evaluation At its meeting on February 10, 2010,2011, the Board of Directors discussed its practices and made suggestions for improvement with respect to broadening criteria when benchmarking with other companies, and for a thorough study of the resultsGroup’s opportunities in the energy sector. These proposals were implemented at the meeting of the new Strategic Committee and when the report of the meeting was presented to the Board of Directors. At its self-evaluationmeeting of February 9, 2012, the Board of Directors discussed its practices on the basis of a formal evaluation carried out with the assistanceby means of a consulting agency, which demonstrated that the Board’s working procedures and the qualitydetailed questionnaire completed by all of the information provided met the Directors’s expectations. Pursuant to the recommendation ofdirectors. The responses were then submitted for examination by the Nominating & Governance Committee at its meeting on February 10, 2010,and summarized. It is this summary that was discussed by the Board approvedof Directors.
The formal evaluation showed a generally positive opinion of the suggestionspractices of the Board of Directors and the Committees, which highlighted that the improvements requested by the directors in 2011 had been made. The Board therefore stated that it was globally satisfied with its practices and suggested improvements mainly relating to more in-depth strategic reflection. This has already been put in place with the Strategic Committee, and work in this area will continue for improvement that were proposed, which were mainly related to the organizationbenefit of a day for strategic thinking.the Board of Directors and the Group. Employees and Share OwnershipEMPLOYEES AND SHARE OWNERSHIP
Employees The tables below set forth the number of employees, by division and geographic location, of the Group (fully-consolidated(fully consolidated subsidiaries) as of the end of the periods indicated: | | | | | | | | | | | | | Upstream | | Downstream | | Chemicals | | Corporate | | Total | 2009 | | 16,628 | | 33,760 | | 44,667 | | 1,332 | | 96,387 | 2008 | | 16,005 | | 34,040 | | 45,545 | | 1,369 | | 96,959 | 2007 | | 15,182 | | 34,185 | | 45,797 | | 1,278 | | 96,442 | | | | | France | | Rest of Europe | | Rest of world | | Total | 2009 | | | | 36,407 | | 26,299 | | 33,681 | | 96,387 | 2008 | | | | 37,101 | | 27,495 | | 32,363 | | 96,959 | 2007 | | | | 37,296 | | 27,374 | | 31,772 | | 96,442 |
| | | | | | | | | | | | | | | | | | | | | | | 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 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 invested in Company shares (“TOTAL ACTIONNARIAT FRANCE”). A “Shareholder Group Savings Plan” (PEG-A) has also been in place since November 19, 1999 to facilitate capital increases reserved for employees of the Group’s French and foreign subsidiaries covered by these plans. Company savings plans The various Company savings plans (PEGT, PEC) give the employees of the Group’s French companies Group Companies belonging to these savings plans access to several collective investment funds (Fondsfonds communs de placement), including a Fundfund invested in shares of the Company (“TOTAL ACTIONNARIAT FRANCE”). The capital increases reserved for employees are conducted under PEG-A through the “TOTAL ACTIONNARIAT FRANCE” fund for employees of the Group’s French subsidiaries and through the “TOTAL ACTIONNARIAT INTERNATIONAL CAPITALISATION” fund for the employees of foreign subsidiaries. In addition, U.S. employees participate in these operations through 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 in Belgium. IncentiveProfit-sharing agreements
Performance indicators used underUnder the June 26, 2009 profit-sharing agreements for employees ofconcerning ten Group companies, the amount available for employees profit-sharing is determined, when permitted by local law, link amounts available for profit sharing tobased on the return on equity (ROE) performance (ROE) of the Group as a whole.
Group.Employee shareholding The total number of TOTAL shares held by employees as of December 31, 2009,2011, is as follows: | | | | | “TOTAL ACTIONNARIAT FRANCEFRANCE” | | 71,010,179 | 78,607,765 | | “TOTAL ACTIONNARIAT INTERNATIONAL CAPITALISATIONCAPITALISATION” | | 16,267,110 | 19,691,590 | | ELF PRIVATISATION No.1N°1 | | 1,208,239 | 929,494 | | Shares held by U.S. employees | | 735,391 | 454,305 | | Group Caisse Autonome (Belgium) | | 310,169 | 436,431 | | TOTAL shares from the exercise of the Company’s stock options and held as registered shares within a Company Savings Plan (PEE)(a) | | 3,207,451 | 3,293,822 | | Total shares held by employee shareholder funds | | 92,738,539 | 103,413,407 | |
(a) | Company savings plans. |
As of December 31, 2009,2011, the employees of the Group employees held, on the basis of the definition of employee shareholding contained in Article L. 225-102 of the French Commercial Code, 92,738,539103,413,407 TOTAL shares, representing 3.95%4.37% of the Company’s share capital and 7.48%8.01% of the voting rights that could be exercised at a Shareholders’ 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’ 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 twenty-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 (par value€4 billion). This delegation of authority has cancelled and replaced, for the unused part, the one granted by the Shareholders’ Meeting on May 17, 2005.made. 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 French Financial Markets Authority (Autorité desmarchés 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. The management of each of the three employee collective investment funds (Fonds Commun de Placement d’Entreprise) mentioned above is controlled by a dedicated supervisory board, two thirds 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 liquidation; 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 thirds plus one related to a change in a fund’s rules and procedures, its conversion or its 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 chart above, voting rights are exercised individually.shares.
Shares held by Directorsthe administration and Executive Officersmanagement bodies As of December 31, 2009,2011, based uponon information from the members of the Board and the share registrar, the members of the Board and the Group Executive Officers (Management (Management Committee and Treasurer) held a total of less than 0.5% of the share capital: Members of the Board of Directors (including the Chairman and the Chief Executive Officer): 558,086317,306 shares; Chairman of the Board of Directors: 380,576 shares; and Chief Executive Officer: 85,230105,556 shares and 43,71453,869 shares of the TOTAL“TOTAL ACTIONNARIAT FRANCEFRANCE” collective investment plan; Management Committee (including the Chief Executive Officer) and Treasurer: 542,935572,527 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. |
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. Members of These shares have to be acquired within three years from the appointment to the Executive Committee are required to hold a number of shares of the Company equal inCommittee.
| | value to two years of the fixed portion of their annual compensation. These shares have to be acquired within three years from the appointment to the Executive Committee.
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The number of TOTAL shares to be considered includes: directly held shares, whether or not they are subject to transfer restrictions; and shares in collective investment funds (FCPE) 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 20092011 by the individuals concerned under paragraphs a) through c) of Article L. 621-18-2 of the French Monetary and Financial Code. Year 2009
| | | | Acquisition | | Subscription | | Transfer | | Exchange | | Exercise of stock options | | Thierry Desmarest(a) | | TOTAL shares | | | | | | 50,000 | | | | 45,000 | | | | 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 | | | | | | | | | | | | TOTAL shares | | | — | | | | — | | | | 93,250 | | | | — | | | | 113,576 | | | | Shares in collective investment plans (FCPE), and other related financial instruments(b) | | 4,215.92 | | | Shares in collective investment plans (FCPE), and other related financial instruments(b) | | | 5,340.09 | | | | — | | | | — | | | | — | | | | — | | Michel Bénézit(a) | | TOTAL shares | | | | 30,000 | | 17,000 | | | | | | TOTAL shares | | | — | | | | — | | | | — | | | | — | | | | | | Shares in collective investment plans (FCPE), and other related financial instruments(b) | | 292.48 | | 189.85 | | 5,310.47 | | | 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 | | | | | | 90,000 | | | | 90,000 | | TOTAL shares | | | — | | | | — | | | | 9,000 | | | | — | | | | | | Shares in collective investment plans (FCPE), and other related financial instruments(b) | | 1,086.47 | | | 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 | | | | | | 4,200 | | | | | | TOTAL shares | | | — | | | | — | | | | 14,412 | | | | — | | | | 6,412 | | | | Shares in collective investment plans (FCPE), and other related financial instruments(b) | | 4.04 | | | 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 | | | | | | | | | | | | TOTAL shares | | | — | | | | — | | | | 29,163 | | | | — | | | | 29,163 | | | | Shares in collective investment plans (FCPE), and other related financial instruments(b) | | 322.97 | | 287.90 | | | Shares in collective investment plans (FCPE), and other related financial instruments(b) | | | 1,008.85 | | | | 14,320.92 | | | | 8,636.03 | | | | — | | | | — | | Bertrand Jacquillat(a) | | TOTAL shares | | 700 | | | | | | | | | | 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) | | TOTAL shares | | | | | | | | | | | | TOTAL shares | | | — | | | | — | | | | — | | | | — | | | | — | | | | Shares in collective investment plans (FCPE), and other related financial instruments(b) | | 150.86 | | 190.88 | | | Shares in collective investment plans (FCPE), and other related financial instruments(b) | | | 756.08 | | | | 14,998.66 | | | | 7,587.71 | | | | — | | | | — | |
(a) | Including the related individuals in the meaning of the provisions of the Article R. 621-43-1 of the French Monetary and Financial Code. |
(b) | Collective investment funds (FCPE) primarily investinginvested in Company shares. |
(c) | Director and member of the Audit Committee until May 13, 2011. |
ITEM 7. MAJOR SHAREHOLDERS AND RELATED PARTY TRANSACTIONS Major shareholders Holdings of principalmajor shareholders The principalmajor shareholders of TOTAL as of December 31, 2009, 20082011, 2010 and 20072009 are set forth in the table below:below. | | | 2009 | | 2008 | | 2007 | | 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 | | 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 | | 3.9 | | 4.0 | | | 4.0 | | | | 4.0 | | | | 3.7 | | | | 4.0 | | | | 4.0 | | | | 4.0 | | | | 4.0 | | Compagnie Nationale à Portefeuille(b)(c) | | 1.4 | | 1.4 | | 1.3 | | 1.4 | | 1.4 | | 1.4 | | 1.4 | | | 1.5 | | | | 1.6 | | | | 1.4 | | | | 1.6 | | | | 1.6 | | | | 1.4 | | | | 1.4 | | Areva(b) | | 0.0 | | 0.0 | | 0.0 | | 0.3 | | 0.6 | | 0.3 | | 0.6 | | BNP Paribas(b) | | 0.2 | | 0.2 | | 0.2 | | 0.2 | | 0.2 | | 0.2 | | 0.3 | | | 0.2 | | | | 0.2 | | | | 0.1 | | | | 0.2 | | | | 0.2 | | | | 0.2 | | | | 0.2 | | Group employees(b)(d) | | 3.9 | | 7.5 | | 6.8 | | 3.8 | | 7.4 | | 3.6 | | 7.0 | | | 4.4 | | | | 8.0 | | | | 7.4 | | | | 4.0 | | | | 7.7 | | | | 3.9 | | | | 7.5 | | Other registered shareholders (non-Group) | | 1.4 | | 2.4 | | 2.2 | | 1.2 | | 2.1 | | 1.2 | | 2.1 | | | 1.7 | | | | 2.8 | | | | 2.6 | | | | 1.4 | | | | 2.5 | | | | 1.4 | | | | 2.4 | | Treasury shares | | 4.9 | | — | | 8.5 | | 6.0 | | — | | 6.3 | | — | | | 4.6 | | | | — | | | | 8.1 | | | | 4.8 | | | | — | | | | 4.9 | | | | — | | of which TOTAL S.A. | | 0.6 | | — | | 0.6 | | 1.8 | | — | | 2.1 | | — | | | 0.4 | | | | — | | | | 0.4 | | | | 0.5 | | | | — | | | | 0.6 | | | | — | | of which Total Nucléaire | | 0.1 | | | | 0.2 | | 0.1 | | — | | 0.1 | | — | | | 0.1 | | | | — | | | | 0.2 | | | | 0.1 | | | | — | | | | 0.1 | | | | — | | of which subsidiaries of Elf Aquitaine | | 4.2 | | | | 7.7 | | 4.1 | | — | | 4.1 | | — | | | 4.2 | | | | — | | | | 7.6 | | | | 4.2 | | | | — | | | | 4.2 | | | | — | | Other bearer shareholders | | 84.2 | | 84.5 | | 77.3 | | 83.1 | | 84.3 | | 83.1 | | 84.6 | | | 83.6 | | | | 83.5 | | | | 76.7 | | | | 84.0 | | | | 84.0 | | | | 84.2 | | | | 84.5 | | of which holders of ADS(e) | | 7.5 | | 7.6 | | 6.9 | | 8.2 | | 8.3 | | 8.5 | | 8.6 | | | 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. |
As of December 31, 2009,2011, the holdings of the principalmajor shareholders were calculated based on the basis of 2,348,422,8842,363,767,313 shares, representing 2,339,384,5502,368,716,634 voting rights exercisable at Shareholders’ Meetings or 2,555,123,0082,578,602,075 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; and 15,075,922 voting rights attached to the 15,075,922 TOTAL shares held by TOTAL S.A. deprived of voting rights.Meetings.
For prior years, the principal shareholders’ interestsholdings of the major shareholders were established on the basis of 2,371,808,0742,349,640,931 shares, to which were attached 2,339,251,3952,350,274,592 voting rights that could be exercised at the Shareholders’ MeetingsMeeting, as of December 31, 2008,2010, and of 2,395,532,0972,348,422,884 shares to which were attached 2,353,106,8882,339,384,550 voting rights that could be exercised at the Shareholders’ MeetingsMeeting, as of December 31, 2007.2009. As of February 28, 2010, there were 175,744,188 ADSs outstanding in the United States, representing approximately 7.5% of the total outstanding shares.
The Company is not directly or indirectly owned or controlled by another corporation, by any foreign government or by any other natural or legal person. The Company does not know of any arrangements that may, at a subsequent date, result in a change of control of TOTAL.
Identification of the holders of bearer shares In accordance with Article 9 of its bylaws,by-laws, the Company is authorized, to the extent permitted under applicable law, to identify the holders of securities that grant immediate or future voting rights at the Company’s Shareholders’ Meetings. Temporary transfer of securities Pursuant to legal obligations, any legal entity or individual (with the exception of those described in paragraph IV-3° of Article L. 233-7 of the French Commercial Code) holding alone or together a number of shares representing more than 0.5% of the Company’s voting rights pursuant to one or several temporary transfers or similar operations as described by Article L. 225-126 of the French Commercial Code is required to inform the Company and the French Financial Markets Authority of the number of shares temporarily held no later than the third business day preceding the shareholders’ meeting at midnight. 1.(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. |
law,Declarations are to identifybe e-mailed to the holdersCompany at: holding.df-shareholdingnotification@total.com.
Failing to declare such information, any share bought under any of securities that grant immediate or futurethe above described temporary transfer operations shall be deprived of voting rights at the Company’srelevant Shareholders’ Meetings.Meeting and at any Shareholders’ Meeting that would be held until such shares are transferred again or returned. Legal thresholdsThresholds notifications
In addition to the legal obligation to inform the Company and the French Financial Markets Authority (Autorité des marchés financiers) within four business days when thresholds representing 5%, 10%, 15%, 20%, 25%, 33 1/30%, 1/3,%, 50%, 66 2/2/3,%, 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 acquirescomes to hold a percentage of the share capital, voting rights or rights giving future access to the share capital of the Company which is equal to or greater than 1%, or a multiple of this percentage, is required to notify the Company within 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 and undeclared may be deprived of voting rights at future Shareholders’ Meetings if, at that meeting, the failure to make a declaration is acknowledged and if one or more shareholders holding collectively at least 3% of the Company’s share capital or voting rights so request at that meeting. All individuals and entities are also required to notify the Company in due form and within the time limits stated above when their direct or indirect holdings fall below each of the aforementioned thresholds. Declarations are to be sent to the Vice President of the Investor Relations department in Paris. 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 of the Company; on May 25, 2011, below the thresholds of 5% of the share capital and the voting rights of the Company, and that it held after crossing the thresholds 4.92% of the share capital and 4.50% of the voting 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 (CNP) and Groupe Bruxelles Lambert (GBL), acting together,in concert, holds 5% or more of TOTAL’s share capital at year-end 20092011(1)(2). In addition, two known shareholders held 5% or more of the voting rights exercisable at TOTAL Shareholders’ Meetings at year-end 2009:2011: CNP jointly with GBL.GBL: In the AMF notice No. 209C1156 dated September 2, 2009, CNP and GBL acting togetherin concert declared that they held more than the threshold of 5% of the voting rights of TOTAL as of August 25, 2009 and held 127,149,464 TOTAL shares representing 127,745,604 voting rights,i.e. 5.42% of the share capital and 5.0009% of the theoretical voting rights(2)(3) (on the basis of a share capital of(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, 2009, 5.41%2011, 5.52% of the share capital representing 5.46%5.53% of the voting rights exercisable at Shareholders’ Meetings and 5%5.08% of the theoretical voting rights(2)(3). • | | The collective investment fund (Fondsfonds commun de placement) “TOTAL ACTIONNARIAT FRANCE”.: |
To the Company’s knowledge, the collective investment fund (Fonds(fonds commun de placement)placement) “TOTAL ACTIONNARIAT FRANCE” held, as of December 31, 2009, 3.02%2011, 3.33% of the share capital representing 5.76%6.12% of the voting rights exercisable at a Shareholders’ Meeting and 5.28%5.62% of the theoretical voting rights(2)(3). ShareholdersShareholders’ agreements
TOTAL is not aware of any agreements among its shareholders. Treasury shares
As of December 31, 2009, the Company held 115,407,190 TOTAL shares either directly or through its indirect subsidiaries, which represented 4.91% of the share capital, as of this date. By law, these shares are also deprived of voting rights.
TOTAL shares held directly by the Company
The Company held 15,075,922 treasury shares as of December 31, 2009, representing 0.64% of the share capital as of that date.
TOTAL shares held directly by Group companies
As of December 31, 2009, Total Nucléaire, a Group company wholly-owned indirectly by TOTAL held 2,023,672 TOTAL shares. As of December 31, 2009, Financière 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, 2009, the Company held through its indirect subsidiaries 4.27% of the share capital.
1.(1) | Source: 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.
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(2) | AMF notice No. 209C1156 dated September 2, 2009. |
2.(3) | Pursuant to Article 223-11 of the AMF General Regulation, the number of theoretical voting rights is calculated on the basis of all outstanding shares, including those shares held by the Group that are deprived of voting rights. |
Treasury shares As of December 31, 2011, the Company held 109,554,173 TOTAL shares either directly or through its indirect subsidiaries, which represented 4.63% of the share capital, as of this date. By law, these shares are also deprived of voting rights. TOTAL shares held directly by the Company (treasury shares) The Company held 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 by Group companies As of December 31, 2011, Total Nucléaire, a Group company wholly-owned indirectly by TOTAL held 2,023,672 TOTAL shares. As of December 31, 2011, Financière 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 held through its indirect subsidiaries, 4.24% of the share capital. Related Party Transactions The Group’s main transactions with related parties (principally all the investments carried under the equity method) and the balances receivable from and payable to them are shown in Note 24 to the Consolidated Financial Statements. In the ordinary course of its business, TOTAL enters into transactions with various organizations with which certain of its directors or executive officers may be associated, but no such transactions of a material or unusual nature have been entered into during the period commencing on January 1, 2007,2009, and ending on March 31, 2010.23, 2012. ITEM 8. FINANCIAL INFORMATION Consolidated Statements and other supplemental information See pages F-1 through F-90 and S-1 through S-16F-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, as part of the reorganization of the Chemicals segment, was principally engaged in the production and sale of agricultural fertilizers. The explosion, which involved a stockpile of ammonium nitrate pellets, destroyed a portion of the site and caused the death of thirty-one people, including twenty-one workers at the site, and injured many others. The explosion also caused significant damage to certain property in part of the city of Toulouse. This plant has been closed and individual assistance packages have been provided for employees. The site has been rehabilitated. On December 14, 2006, Grande Paroisse signed, under the supervision of the city of Toulouse, the deed whereby it donated the former site of the AZF plant to the greater agglomeration of Toulouse (CAGT) and theCaisse des dépôts et consignations and its subsidiary ICADE. Under this deed, TOTAL S.A. guaranteed the site restoration obligations of Grande Paroisse and granted a€10 million endowment to the InNaBioSanté research foundation as part of the setting up of a cancer research center at the site by the city of Toulouse. Regarding the cause of the explosion, the hypothesis that the explosion was caused by Grande Paroisse through the accidental mixing of hundreds of kilos of a chlorine compound at a storage site for ammonium nitrate was 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 denied 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 plant manager before the criminal chamber of the Court of Appeal of Toulouse. In late 2008, TOTAL S.A. and Mr. Thierry Desmarest were summoned to appear in courtCourt pursuant to a request by a victims
association. The trial for this case began on February 23, 2009, and lasted approximately four months. On November 19, 2009, the Toulouse Criminal Court acquitted both the former Plant Manager, and Grande Paroisse due to the lack of reliable evidence for the explosion. The Court also ruled that the summonses against TOTAL S.A. and Mr. Thierry Desmarest, Chairman and CEO at the time of the disaster, were inadmissible. Due to the presumption of civil liability that applied to Grande Paroisse, the Court declared Grande Paroisse civilly liable for the damages caused by the explosion to the victims in its capacity as custodian and operator of the plant. The Prosecutor’s office, together with certain third parties, has appealed the Toulouse Criminal Court verdict. In order to preserve its rights, Grande Paroisse lodged a cross-appeal with respect to civil charges. The appeal proceedings are expected to be ruled bybefore the Court of Appeal of Toulouse during the first half of 2011.was completed on March 16, 2012. The decision is expected on September 24, 2012. A compensation mechanism for victims was set up immediately following the explosion andexplosion.€2.292.3 billion in settlement werewas paid for the compensation of all claims and related expenses amounts. As of December 31, 2009,2011, a€4021 million reserve iswas recorded in the Group’s Consolidated Balance Sheet.consolidated balance sheet. 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 several criminal investigations, today closed, and civil liability lawsuits for violations of antitrust laws in the United States. TOTAL S.A. has been named in certain of these suits as the parent company.
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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 million and jointly fined Arkema and Elf Aquitaine€45 million. On September 30, 2009, the Court of First Instance of the European Union denied the appeal from Arkema and Elf Aquitaine. An appeal has been filed to the Court of Justice of the European Communities in the allotted time.
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 million and€219.1 million as a result of, respectively, each of these two proceedings. Elf Aquitaine was held jointly and severally liable for, respectively,€65.1 million and€181.35 million of these fines while TOTAL S.A. was held jointly and severally liable, respectively, for€42 million and€140.4 million. 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 million and individually in an amount of€20.43 million for Arkema and€15.89 million for Elf Aquitaine. The companies concerned have 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. The decision was rendered by the European Commission in November 2009. Arkema and Elf Aquitaine were jointly and severally fined in an amount of€11 million and individually in an amount of€9.92 million for Arkema and€7.71 million for Elf Aquitaine. The companies concerned will appeal 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.
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, 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 million threshold.
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. |
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 amounting to€43 million in its consolidated financial statements as of December 31, 2009 to cover the risks mentioned above.
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 million and in TOTAL S.A. as its parent company being held jointly responsible for€13.5 million 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 (new corporate name: Total Raffinage & Marketing) 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 million 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 have appealed this decision to the Court of First Instance of the European Union.
Furthermore, in July 2009, the French antitrust Authority sent to TotalGaz and Total Raffinage Marketing a statement of objections regarding alleged antitrust practices concerning another product line of the Refining & Marketing division.
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, the Group believes that they will not have a material adverse effect on its financial situation or consolidated results.
|
Sinking of the Erika
Following the sinking in December 1999 of the Erika, a tanker that was transporting products belonging to one of the Group companies, the Tribunal 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. TOTAL S.A. was fined€375,000. The court also ordered compensation to be paid to the victims of pollution from the Erika up to an aggregate amount of€192 million, declaring TOTAL S.A. jointly and severally liable for such payments together with the Erika’s inspection and classification firm, the Erika’s owner and the Erika’s manager.
TOTAL 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 request definitive compensation as determined by the court. As of today, forty-one third parties have been compensated for an aggregate amount of€171.5 million.
The appeal proceedings were heard by the Court of Appeal of Paris in late 2009.
By decision dated March 30, 2010, the Court of Appeal upheld the lower court judgment pursuant to which TOTAL S.A. was convicted of marine pollution and fined the Company€375,000. TOTAL S.A. is considering the possibility of filing an appeal in the French Supreme Court(Cour de cassationBuncefield) in this respect.
On the other hand, the Court of Appeal ruled that TOTAL S.A. bears no civil liability according to the applicable international conventions.
TOTAL S.A. considers, according to the information currently available to it, that this case should have no significant 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 iswas operated by Hertfordshire Oil Storage Limited (HOSL), a company in which TOTAL’s UK subsidiary holds 60% and another oil group holds 40%. The explosion caused injuries, most of which were minor injuries, to a number of people and caused property damage to the depot and the buildings and homes located nearby. The official Independent Investigation Board has indicated that the explosion was caused by the overflow of a tank at the depot. The Board’s final report was released on December 11, 2008. The civil procedure for claims, which 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 hearings were heldtrial took place in January 2010. The Court of Appeal,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 is looking intoto contest the possibilitydecision. TOTAL’s UK subsidiary finally decided to file an appeal before the Supreme Court with respect withdraw from this recourse due to both the extent and sharing of the liabilities incurred. The provision for the civil liability that appearssettlement agreements reached in the Group’s consolidated financial statements as of December 31, 2009, stands at€295 million after taking into account payments previously made.mid-February 2011.
The Group carries insurance for damage to its interests in these facilities, business interruption and civil liability claims from third parties. The residual amount to be received from insurers amounts to€211 millionprovision for the civil liability that appears in the Group’s consolidated financial statements as of December 31, 2009.2011, 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 financial 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. In November 2009, TOTAL’s UKBy a judgment on July 16, 2010, the subsidiary pleaded guilty to the charges brought by the prosecutionwas fined £3.6 million and intends to raisepaid it. The decision takes into account a number of elements likely to mitigatethat have mitigated the impact of the charges brought against it.
MyanmarSinking of the Erika
UnderFollowing the Belgian “universal jurisdiction” lawssinking in December 1999 of Junethe Erika, a tanker that was transporting products belonging to one of the Group companies, theTribunal de grande instance of Paris convicted TOTAL S.A. of marine pollution pursuant to a judgment issued on January 16, 19932008, finding that TOTAL S.A. was negligent in its vetting procedure for vessel selection, and February 10, 1999,ordering TOTAL S.A. to pay a complaint was filed in Belgium on April 25, 2002, againstfine of€375,000. The Court also ordered compensation to be paid to those affected by the Company, its Chairmanpollution from the Erika up to an aggregate amount of€192 million, declaring TOTAL S.A. jointly and severally liable for such payments together with the Erika’s inspection and classification firm, the Erika’s owner and the former presidentErika’s manager.
TOTAL has appealed the verdict of its subsidiary in Myanmar. These laws were repealedJanuary 16, 2008. In the meantime, it nevertheless proposed to pay third parties who so requested definitive compensation as determined by the Belgian lawCourt. Forty-two third parties have been compensated for an aggregate amount of August 5, 2003 on “serious violations of international human rights”, which also provided a procedure for€171.5 million. terminating certain proceedings that were underway. In this framework, the Belgian Cour de cassation terminated the proceedings against TOTAL inBy a decision dated June 29, 2005. The plaintiffs’ request to withdraw this decision was rejected by the Cour 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, 2010, the Court of Appeal of Brussels. In its decisionParis upheld the lower Court verdict pursuant to which TOTAL S.A. was convicted of March 5, 2008,marine pollution and fined€375,000. However, the Court of Appeal confirmedruled that TOTAL S.A. bears no civil liability according to the applicable international conventions and consequently ruled that TOTAL S.A. be not convicted.
TOTAL challenged the criminal law-related issues of this decision before the French Supreme Court (Cour de cassation). To facilitate the payment of damages awarded by the Court of Appeal in Paris to third parties against Erika’s controlling and classification firm, the ship-owner and the ship-manager, a global settlement agreement was signed late 2011 between these parties and TOTAL S.A. under the auspices of the IOPC Fund. Under this global settlement agreement, each party agreed to the withdrawal of all civil proceedings initiated against all other parties to the agreement. TOTAL S.A. believes that, based on the information currently available, the case should not have a significant impact on the Group’s financial situation or consolidated results. Blue Rapid and the Russian Olympic Committee — Russian regions and Interneft Blue Rapid, a Panamanian company, and the Russian Olympic Committee filed a claim for damages with the Paris Commercial Court against Elf Aquitaine, alleging a so-called non-completion by a former subsidiary of Elf Aquitaine of a contract related to an exploration and production project in Russia negotiated in the early 1990s. Elf Aquitaine believed this claim to be unfounded and opposed it. On January 12, 2009, the Commercial Court of Paris rejected Blue Rapid’s claim against Elf Aquitaine and found that the Russian Olympic Committee did not have standing in the matter. Blue Rapid and the Russian Olympic Committee appealed this decision. On June 30, 2011, the Court of Appeal of Paris dismissed as inadmissible the claim of Blue Rapid and the Russian Olympic Committee against Elf Aquitaine, notably on the grounds of the contract’s termination. Blue Rapid and the Russian Olympic Committee appealed this decision to the French Supreme Court. In connection with the same facts, and fifteen years after the termination of the proceedingsexploration and production contract, a Russian company, which was held not to be the contracting party to the contract, and two regions of the Russian Federation which were not even parties to the contract, have launched an arbitration procedure against TOTAL, its Chairmanthe aforementioned former subsidiary of Elf Aquitaine that was liquidated in 2005, claiming alleged damages of U.S.$22.4 billion. For the same reasons as those successfully adjudicated by Elf Aquitaine against Blue Rapid and the former president of its subsidiary, based onRussian Olympic Committee, the principle ofres judicataapplyingGroup considers this claim to the Cour de cassation’s decision of June 29, 2005. The plaintiffs appealed the decision of March 5, 2008. On October 29, 2008, the Cour 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 United 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 possibility that additional procedures may be initiated with respect to this matter. Italy
As part of an investigation led by the Prosecutoroutcome of the Republic oftalks that have been initiated. Resolving these cases is not expected to have a significant impact on the Potenza court, Total Italia isGroup’s financial situation or consequences on its future planned operations.
Libya In June 2011, the subject of an investigationSEC issued to certain oil companies — including, among others, TOTAL — a formal request for information related to certain calls for tenders that it 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 fortheir operations in Libya. TOTAL is cooperating with 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 handed down on 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.non-public investigation. In January 2010, the Prosecutor of the Potenza Court filed for a notice to close the criminal investigation.
Since in January 1, 2010, Total Italia’s exploration and production operations have been transferred to Total E&P Italia.
Oil-for-Food Program Several countries have commencedlaunched investigations concerning possible violations related to the United Nations (UN) “Oil-for-Food”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’s office. In 2009, the Prosecutor’s office recommended dismissingto the investigating judge that the case for allagainst the Group’s current and former employees and for theTOTAL’s Chairman and Chief Executive Officer.Officer not be pursued. In early 2010, despite the advicerecommendation of the Prosecutor’s office, a new investigating judge, having taken over the case, decided to placeindict TOTAL S.A. under formal investigation with respect toon bribery charges as well as complicity and influence peddling. This formal investigation has been pronounced The indictment was brought eight years after the beginning of the investigation without any new evidence being addedintroduced. In October 2010, the Prosecutor’s office recommended to the affair.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 hearings are expected in the first quarter of 2013. The Company believes that its activities related to the “Oil-for-Food”Oil-for-Food program have been in compliance with this program, as organized by the UN in 1996. The VolkerVolcker 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.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 Committeesubject 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 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. Blue Rapid, a Panamanian company, andThe criminal investigation was closed in the Russian Olympic Committee filed a claim for damages withfirst half of 2010. The preliminary hearing judge, who will decide whether the Paris Commercialcase shall be returned to the Criminal Court against Elf Aquitaine concerning its withdrawal from anto 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 in the early 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 2009 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 21, 2010. Aneach year. Consequently, for 2010, an interim dividend of€1.14 per share was paid on November 18, 2009. 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 11, 2012, including a remainder of€0.57 per share, with an ex-dividend date on June 1, 2010.18, 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 20102012 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 fifty most highly capitalized and most actively traded equities throughout Europe and within the European Monetary Union, respectively. Since June 2000, the shares have been included in the Dow Jones Global Titans Index which consists of fifty global companies selected based on market capitalization, book value, assets, revenue and earnings. Pursuant to the vote of the May 12, 2006, shareholders’ meeting approving TOTAL’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 | | | High adjusted | | Low adjusted | | High | | | Low | | 2005 | | 57.28 | | | 39.50 | | | 56.54 | | 38.99 | | 2006 | | 58.15 | | | 46.52 | | | 57.40 | | 46.52 | | 2007 | | 63.40 | | | 48.33 | | | — | | — | | | 63.40 | | | | 48.33 | | 2008 | | 59.50 | | | 31.52 | | | — | | — | | | 59.50 | | | | 31.52 | | 2009 | | | | 45.785 | | | | 34.25 | | 2010 | | | | 46.735 | | | | 35.655 | | First Quarter | | 59.50 | | | 45.45 | | | — | | — | | | 46.735 | | | | 40.050 | | Second Quarter | | 58.25 | | | 46.35 | | | — | | — | | | 44.625 | | | | 36.210 | | Third Quarter | | 54.24 | | | 40.50 | | | — | | — | | | 41.000 | | | | 35.655 | | Fourth Quarter | | 44.55 | | | 31.52 | | | — | | — | | | 41.275 | | | | 36.910 | | | 2009 | | 45.785 | | | 34.25 | | | — | | — | | 2011 | | | | 44.550 | | | | 29.400 | | First Quarter | | 42.465 | | | 34.25 | | | — | | — | | | 44.550 | | | | 39.710 | | Second Quarter | | 42.455 | | | 34.72 | | | — | | — | | | 43.730 | | | | 37.305 | | Third Quarter | | 42.45 | | | 35.75 | | | — | | — | | | 40.895 | | | | 29.400 | | September | | 42.45 | | | 38.91 | | | — | | — | | | 34.820 | | | | 29.400 | | Fourth Quarter | | 45.785 | | | 39.005 | | | — | | — | | | 39.810 | | | | 31.730 | | October | | 43.11 | | | 39.005 | | | — | | — | | | 39.810 | | | | 31.730 | | November | | 43.495 | | | 40.50 | | | — | | — | | | 38.705 | | | | 34.570 | | December | | 45.785 | | | 41.50 | | | — | | — | | | 39.605 | | | | 35.940 | | | 2010 (through February 28) | | 46.735 | | | 40.05 | | | — | | — | | 2012 (through February 29) | | | | 42.400 | | | | 38.570 | | January | | 46.735 | | | 41.215 | | | — | | — | | | 40.890 | | | | 38.570 | | February | | 43.165 | | | 40.05 | | | — | | — | | | 42.400 | | | | 40.225 | |
Trading on the New York Stock Exchange ADSs evidenced by ADRs have been listed on the New York Stock Exchange since October 25, 1991. The Bank of New York Mellon serves as depositary with respect to the ADSs evidenced by ADRs traded on the New York Stock Exchange. One ADS corresponds to one TOTAL share. The table below sets forth, for the periods indicated, the reported high and low prices quoted in dollars for the currently outstanding ADSs evidenced by ADRs on the New York Stock Exchange. After 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 | | 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 | | | — | | — | | | 91.34 | | | | 42.60 | | 2009 | | | | 65.98 | | | | 42.88 | | 2010 | | | | 67.52 | | | | 43.07 | | First Quarter | | 86.90 | | 67.11 | | | — | | — | | | 67.52 | | | | 54.01 | | Second Quarter | | 91.34 | | 73.09 | | | — | | — | | | 60.24 | | | | 43.07 | | Third Quarter | | 83.99 | | 57.19 | | | — | | — | | | 54.14 | | | | 44.43 | | Fourth Quarter | | 60.90 | | 42.60 | | | — | | — | | | 58.06 | | | | 48.08 | | | 2009 | | 65.98 | | 42.88 | | | — | | — | | 2011 | | | | 64.44 | | | | 40.00 | | First Quarter | | 57.85 | | 42.88 | | | — | | — | | | 62.31 | | | | 52.61 | | Second Quarter | | 59.93 | | 45.02 | | | — | | — | | | 64.44 | | | | 53.04 | | Third Quarter | | 62.43 | | 49.78 | | | — | | — | | | 58.25 | | | | 40.00 | | September | | 62.43 | | 55.53 | | | — | | — | | | 49.79 | | | | 40.00 | | Fourth Quarter | | 65.98 | | 57.05 | | | — | | — | | | 55.93 | | | | 41.85 | | October | | 64.65 | | 57.05 | | | — | | — | | | 55.93 | | | | 41.85 | | November | | 64.50 | | 59.37 | | | — | | — | | | 52.89 | | | | 46.72 | | December | | 65.98 | | 60.62 | | | — | | — | | | 52.46 | | | | 47.00 | | | 2010 (through February 28) | | 67.52 | | 54.01 | | | — | | — | | 2012 (through February 29) | | | | 57.06 | | | | 48.82 | | January | | 67.52 | | 57.38 | | | — | | — | | | 53.41 | | | | 48.82 | | February | | 59.60 | | 54.01 | | | — | | — | | | 57.06 | | | | 53.01 | |
ITEM 10. ADDITIONAL INFORMATION Memorandum and Articles of Association Register Informationinformation TOTAL S.A. is registered with the Nanterre Trade Register under the registration number 542 051 180. Objects and Purposespurposes The Company’s purpose can be found in Article 3 of its bylaws (statuts). Generally, the Company may engage in all activities relating to: (i) the exploration and extraction of mining deposits and the performance of industrial refining, processing, and trading of these materials, as well as their derivatives and by-products; (ii) the production and distribution of all forms of energy; (iii) the chemicals, rubber and health industries; (iv) the transportation and shipping of hydrocarbons and other products or materials relating to the Company’s business purpose; and (v) all financial, commercial, and industrial operations and operations relating to any fixed or unfixed assets and real estate, acquisitions of interests or holdings in any business or company that may relate to any of the above-mentioned purposes or to any similar or related purposes, of such nature as to promote the Company’s extension or its development. Director Issues
Director issues Compensation Directors receive attendance fees, the maximum aggregate amount of which, determined by the shareholders acting at a shareholders’ meeting, remains in effect until a new decision is made. The Board of Directors may apportion this amount among its members in whatever way it considers appropriate. In addition, the Board may also grant its Chairman compensation. Retirement The number of directors of TOTAL who are acting in their own capacity or as permanent representatives of a legal entity and are over seventy years old may not exceed one-third of the number of directors in office at the end of the fiscal year. If such number is exceeded, the oldest Board member is automatically deemed to have resigned. Directors who are the permanent representative of a legal person may not continue in office beyond their seventieth birthday. Currently, the duties of the Chairman of the Board automatically cease on his sixty-fifth birthday at the latest. At their meeting of May 15, 2009, the
shareholders adopted an amendment of the bylaws pertaining to the rules relating to the nomination of the Chairman. The amendment allows the Board, as an exception to the currently applicable sixty-five year age limit, to appoint as Chairman of the Board for a period of up to two years a director who is more than sixty-five years old but less than seventy years old. Shareholdings Each director must own at least 1,000 shares of TOTAL during his or her term of office.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 the bylaws of the Company and French Company Law as codified in Volume II (Livre II) of the French Commercial Code (referred to herein as the “French Company Law”). For more complete information, please read the bylaws of TOTAL S.A., a copy of which has been filed as an exhibit to this Annual Report. Dividend rights The Company may make dividend distributions to its shareholders from net income in each fiscal year, after deduction of the overhead and other social charges, as well as of any amortization of the business assets and of any provisions for commercial and industrial contingencies, as reduced by any loss carried forward from prior years, and less any contributions to reserves or amounts that the shareholders decide to carry forward. These distributions are also subject to the requirements of French Company Law and the Company’s bylaws. Under French Company Law, the Company must allocate 5% of its net profits in each fiscal year to a legal reserve fund until the amount in that fund is equal to 10% of the nominal amount of its share capital. The Company’s bylaws provide that its shareholders may decide to allocate all or a part of any distributable profits among special or general reserves, to carry them forward to the next fiscal year as retained earnings, or to allocate them to the shareholders as dividends. The bylaws provide that the 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. According to the Company’s bylaws, each registered share that is fully paid and registered in the name of the same shareholder for a continuous period of at least two years is granted a double voting right after such two-year period. Upon capital increase by capitalization of reserves, profits or premiums on shares, a double voting right is granted to each registered share allocated to a shareholder relating to previously existing shares that already carry double voting rights. The double voting right is automatically canceled when the share is converted into a bearer share or when the share is transferred, unless the transfer is due to inheritance, division of community property between spouses, or a donation during the lifetime of the shareholder to the benefit of a spouse or relatives eligible to inherit. 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’s bylaws, the voting rights exercisable by a shareholder, directly, indirectly or by proxy, at any shareholders’ meeting are limited to 10% of the total number of voting rights attached to the shares on the date of such shareholders’ meeting. This 10% limitation may be increased by taking into account double voting rights held directly or indirectly by the shareholder or by proxy, provided that the voting rights exercisable by a shareholder at any shareholders’ meeting may never exceed 20% of the total number of voting rights attached to the shares.
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, 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 twenty-four months. Description of TOTAL Share Certificatesshare certificates
The TOTAL share certificates are issued by Euroclear France. French law allows Euroclear France to create certificates representing French securities provided that these certificates are intended to be outstanding exclusively outside the territory of France and cannot be held by residents of France. Furthermore, TOTAL share certificates may not be held by a foreign resident in France, either personally or in the form of a bank deposit, but the coupons and rights may be exercised in France. Certificates for TOTAL shares are either in bearer form or registered in a securities trading account. Under Euroclear France regulations applicable to bearer stock certificates, TOTAL share certificates cannot be categorized as secondary securities, such as ADSs, issued by a foreign company to represent TOTAL shares. TOTAL share certificates have the characteristics of a bearer security, meaning they are: negotiable outside France; transmitted by delivery; and 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’ Meeting to the Board of Directors. Seventeenth resolution of the Shareholders’ Meeting held on May 21, 2010 Delegation of authority granted by the Shareholders’ Meeting to the Board of Directors to increase the share capital by issuing common shares or other securities granting immediate or future rights to the Company’s share capital, maintaining shareholders’ pre-emptive subscription rights up to a maximum nominal amount of€2.5 billion,i.e., 1 billion shares (delegation of authority valid for twenty-six months). Furthermore, the maximum nominal amount of the debt securities granting rights to the Company’s share capital that may be issued pursuant to the seventeenth resolution and the eighteenth resolution (mentioned below) may not exceed€10 billion, or their exchange value, on the date of issuance. Eighteenth resolution of the Shareholders’ Meeting held on May 21, 2010 Delegation of authority granted by the Shareholders’ Meeting to the Board of Directors to increase the share capital by issuing common shares or other securities granting immediate or future rights to the Company’s share capital, canceling shareholders’ pre-emptive subscription rights, including the compensation comprised of securities as part of a public exchange offer, provided that they meet the requirements of Article L. 225-148 of the French Commercial Code. This resolution grants the Board of Directors the authority to grant a priority period for shareholders to subscribe to these securities pursuant to the provisions of Article L. 225-135 of the French Commercial Code. The total amount of the capital increases without pre-emptive subscription rights likely to occur immediately or in the future cannot exceed the nominal amount of€850 million,i.e., 340 million shares, par value€2.50 (delegation of authority valid for twenty-six months). The nominal amount of the capital increases is counted against the maximum aggregate nominal amount of€2.5 billion authorized by the seventeenth resolution of the Shareholders’ Meeting held on May 21, 2010. Furthermore, the maximum nominal amount of the debt securities granting rights to the Company’s share capital that may be issued pursuant to the above mentioned seventeenth and eighteenth resolutions may not exceed€10 billion, or their exchange value, on the date of issuance. Nineteenth resolution of the Shareholders’ Meeting held on May 21, 2010 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’s bylaws, modification of shareholders’ rights, mergers, increases or decreases in share capital, including a waiver of preferential subscription rights, the creation of a new class of shares, the authorization of the issuance of investment certificates or securities convertible, exchangeable or redeemable into shares and for the sale or transfer of substantially all of a company’s assets. The Company’s Board of Directors is required to convene an annual shareholders’ meeting for approval of the annual financial statements. This meeting must be held within six months of the end of the fiscal year. However, the president of theTribunal de Commerceof Nanterre, the local French commercial court, may grant an extension of this six-month period. The Company may convene other ordinary and extraordinary meetings at any time during the year. Meetings of shareholders may be convened by the Board of Directors or, if it fails to call a meeting, by the Company’s statutory auditors or by a court-appointed agent. A shareholder or group of shareholders holding at least 5% of the share capital, the employee committee or another interested party under certain exceptional circumstances, may request that the court appoint an agent. The notice of meeting must state the agenda for the meeting. French Company Law requires that a preliminary notice of a listed company’s shareholders’ meeting be published in theBulletin des annonces légales obligatoires(“BALO”) at least thirty-five days prior to the meeting (or fifteen days in the event the Company is subject to a tender offer and the Company calls a shareholders’ meeting to approve measures, the implementation of which would be likely to cause such tender offer to fail). The preliminary notice must first be sent to the French Financial Markets Authority (Autorité des marchés financiers) (“AMF”) with an indication of the date it is to be published in the BALO. The preliminary notice must include the agenda of the meeting and the proposed resolutions that will be submitted to a shareholders’ vote. Within ten 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 fifteen days (or six days in the event of shareholders’ meetings convened in the situation where the Company
was subject to a tender offer to approve measures, the implementation of which would be likely to cause such tender offer to fail) before the meeting to all holders of registered shares who have held their shares for more than one month. However, in the case where the original meeting was adjourned because a quorum was not met, this time period is reduced to 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’s bylaws, shareholders’ meetings are held at the Company’s registered office or at any other location specified in the written notice. Requirements for temporary transfer of securities French Company Law provides that any legal entity or individual (with the exception of those described 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 own securities of the Company, either under French Company Law or under the bylaws of the Company.
Requirement for holdings exceeding certain percentages French Company Law provides that any individual or entity, acting alone or in concert with others, that holds, directly or indirectly, more than 5%, 10%, 15%, 20%, 25%, 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 four business days of crossing that threshold,any of the above-mentioned thresholds, of the number of shares and voting rights it holds. An individual or entity must also notify the AMF, the self-regulatoryself- regulatory organization that has general regulatory authority over the French stock exchanges and whose members include representatives of French stockbrokers, by registered letter, with return receipt, within four trading days of crossing that threshold.any of the above-mentioned thresholds. In addition, every shareholder who, directly or indirectly, acting alone or in concert with others, acquires ownership or control of shares representing 10%, 15%, 20% or 25% of the Company’s share capital must notify the Company and the AMF of its intentions for the six months following such an acquisition. Any shareholder who fails to comply with thesethe above requirements (thresholds and intentions notifications) will have its voting rights in excess of such thresholds suspended for a period of two years from the date such shareholder complies with the notification requirements and may have all or part of its voting rights suspended for up to five years by the commercial court at the request of the Company’s Chairman, any of the Company’s shareholders or the AMF. In addition, every shareholder who, directly or indirectly, acting alone or in concert with others, acquires ownership or control of shares representing 10%, 15%, 20% or 25% of the Company’s share capital must notify the Company and the AMF of its intentions for the six months following such an acquisition. Failure to comply with this notification of intentions will result in the suspension of the voting rights attached to the shares exceeding the applicable threshold held by the shareholder for a period of two years from the date on which the shareholder has cured such default and, upon a decision of the commercial court part or all the shares held by such shareholder may be suspended for up to five years. In addition, the Company’s bylaws provide that any person, whether a natural person or a legal entity, who comes to hold, directly or indirectly, 1% or more, or any multiple of 1%, of the Company’s share capital or voting rights or of securities that may include future voting rights 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, 2008.23, 2010. (1) | For purposes of shareholding threshold declarations, pursuant to Article 223-11 of the General Regulation of the AMF, voting rights are calculated on the basis of all outstanding shares, whether or not these shares would have rights to vote at a shareholders’ meeting. |
Exchange Controls Under current French exchange control regulations, no limits exist on the amount of payments that TOTAL may remit to residents of the United States. Laws and regulations concerning foreign exchange controls do require, however, that an accredited intermediary must handle all payments or transfer of funds made by a French resident to a non-resident. Taxation General This section generally summarizes the material U.S. federal income tax and French tax consequences of owning and disposing of shares and ADSs of TOTAL to U.S. Holders that hold their shares or ADSs as capital assets for tax purposes. A U.S. Holder is a beneficial owner of shares or ADSs that is (i) a citizen or resident of the United States for U.S. federal income tax purposes, (ii) a domestic corporation or other domestic entity treated as a corporation for U.S. federal income tax purposes, (iii) an estate whose income is subject to U.S. federal income tax regardless of its source, or (iv) a trust if a U.S. court can exercise primary supervision over the trust’s administration and one or more U.S. persons are authorized to control all substantial decisions of the trust. This section does not apply to members of special classes of holders subject to special rules, including: traders in securities that elect to use a mark-to-market method of accounting for their securities holdings;
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. |
tax-exempt organizations; life insurance companies; persons liable for alternative minimum tax; persons that actually or constructively own 10% or more of the share capital or voting rights in TOTAL; persons that purchase or sell shares or ADSs as part of a wash sale for U.S. federal income tax purposes; persons that hold the shares or ADSs as part of a straddle or a hedging or conversion transaction; or persons whose functional currency is not the U.S. dollar. If a partnership holds ordinary shares or ADSs, the tax treatment of a partner will generally depend upon the status of the partner and upon the activities of the partnership. Partners of a partnership holding these ordinary shares or ADSs should consult their tax advisors as to the tax consequences of owning or disposing of ordinary shares or ADSs, as applicable. In addition, the discussion of the material French tax consequences is limited to U.S. Holders that (i) are residents of the United States for purposes of the Treaty (as defined below), (ii) do not maintain a permanent establishment or fixed base in France to which the shares or ADSs are attributable and through which the respective U.S. Holders carry on, or have carried on, a business (or, if the holder is an individual, performs or has performed independent personal services), and (iii) are otherwise eligible for the benefits of the Treaty in respect of income and gain from the shares or ADSs. In addition, this section is based in part upon the representations of the Depositary and the assumption that each obligation in the Deposit Agreement and any related agreement will be performed in accordance with its terms. This section is based on the Internal Revenue Code of 1986, as amended, its legislative history, existing and proposed regulations, published rulings and court decisions, and with respect to the description of the material French tax consequences, the laws of the Republic of France and French tax regulations, all as currently in effect, as well as on the Convention Between the United States and the Republic of France for the Avoidance of Double Taxation and the Prevention of Fiscal Evasion with respect to Taxes on Income and Capital dated August 31, 1994 as amended (the “Treaty”). These laws, regulations and the Treaty are subject to change, possibly on a retroactive basis. This discussion is intended only as a descriptive summary and does not purport to be a complete analysis or listing of all potential tax effects of the ownership or disposition of the shares and ADSs and is not intended to substitute competent professional advice. Individual situations of holders of shares and ADSs may vary from the description made below. The following summary does not address the French tax treatment applicable to dividends transferred to so calledso-called “Non Cooperative Countries and Territories” within the meaning of the new Section 230-0A238-0 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%. This 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. 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. To effect such benefit or recovery, the Depositary shall advise such U.S. Holder to return the relevant forms to it, properly completed and executed. Upon receipt of the relevant forms properly completed and executed by such U.S. Holder, the Depositary shall cause them to be filed with the appropriate French tax authorities, and upon receipt of any resulting remittance, the Depositary shall distribute to the U.S. Holder entitled thereto, as soon as practicable, the proceeds thereof in U.S. dollars. The identity and address of the French paying agent are available from TOTAL. U.S. taxation For U.S. federal income tax purposes and subject to the passive foreign investment company rules discussed below, the gross amount of any dividend a U.S. Holder
must include in gross income equals the amount paid by TOTAL to the extent of the current and accumulated earnings and profits of TOTAL (as determined for U.S. federal income tax purposes). The dividend will be income from foreign sources. Dividends paid to a noncorporatenon-corporate U.S. Holder in taxable years beginning before January 1, 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 will constitute “passive income”, or, in the case of certain U.S. Holders, “general income”, which are 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 shares or ADSs will not be treated as stock of a passive foreign investment company, or PFIC, for United States federal income tax purposes, but this conclusion is a factual determination that is made annually and thus is subject to change. If TOTAL is treated as a PFIC, unless a U.S. Holder elects to be taxed annually on a mark-to-market basis with respect to the shares or ADSs, gain realized on the sale or other disposition of the shares or ADSs would in general not be treated as capital gain. Instead, a U.S. Holder would be treated as if he or she had realized such gain and certain “excess distributions” ratably over the holding period for the shares or ADSs and would be taxed at the highest tax rate in effect for each such year
to which the gain was allocated, in addition to which an interest charge in respect of the tax attributable to each such year would apply. With certain exceptions, a U.S. Holder’s shares or ADSs will be treated as stock in a PFIC if TOTAL were a PFIC at any time during his or her holding period in the shares or ADSs. Dividends paid will not be eligible for the special tax rates applicable to qualified dividend income if TOTAL is treated as a PFIC with respect to a U.S. Holder either in the taxable year of the distribution or the preceding taxable year, but instead will be taxable at rates applicable to ordinary income. French Estateestate and Gift Taxesgift taxes In general, a transfer of ADSs or shares by gift or by reason of the death of a U.S. Holder that would otherwise be subject to French gift or inheritance tax, respectively, will not be subject to such French tax by reason of the Convention between the United States of America and the French Republic for the Avoidance of Double Taxation and the Prevention of Fiscal Evasion with Respect to Taxes on Estates, Inheritances and Gifts, dated November 24, 1978 as amended, unless the donor or the transferor is domiciled in France at the time of making the gift, or at the time of his death, or if the ADSs or shares were used in, or held for use in, the conduct of a business through a permanent establishment or a fixed base in France. French Wealth Taxwealth tax The French wealth tax does not apply to a U.S. Holder (i) that is not an individual, or (ii) in the case of individuals who are eligible for the benefits of the Treaty and who own, alone or with related persons, directly or indirectly, TOTAL shares which give right to less than 25% of TOTAL’s earnings. U.S. Statestate and Local Taxeslocal taxes In addition to U.S. federal income tax, U.S. Holders of shares or ADSs may be subject to U.S. state and local taxes with respect to their shares or ADSs. U.S. Holders should consult their own tax advisors. Dividends and Paying Agents After BNP Paribas Securities Services performs centralizing procedures, dividends are paid through the accounts of financial intermediaries participating in Euroclear France’s direct payment procedures. The Bank of New York Mellon acts as paying agent for dividends distributed to ADS holders. Documents on Display TOTAL files annual, periodic, and other reports and information with the Securities and Exchange Commission. You may read and copyinspect any reports, statements or other information TOTAL files with the United States Securities and Exchange Commission (“SEC”) at the SEC’s public reference rooms by calling the SEC for more information at 1-800-SEC-0330. All of TOTAL’s SEC filings made after December 31, 2001, are available to the public at the SEC 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 SEC at the offices of The New York Stock Exchange, 20 Broad Street, New York, New York 10005.
ITEM 11. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK Please refer to Note 31 to the Consolidated Financial Statements included elsewhere herein for a qualitative and quantitative discussion of the Group’s exposure to market risks. Please also refer to Notes 29 and 30 to the Consolidated Financial Statements included elsewhere herein for details of the different derivatives owned by the Group in these markets. As part of its financing and cash management activities, the Group uses derivative instruments to manage its exposure to changes in interest rates and foreign exchange rates. These instruments are principally interest rate and currency swaps. The Group may also use, on a less frequent basis, futures 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 Consolidated Financial Statements included elsewhere herein. The financial performance of TOTAL is sensitive to a number of factors, the most significant being oil and gas prices, generally expressed in dollars, and exchange rates, in particular that of the dollar versus the euro. Generally, a rise in the price of crude oil has a positive effect on earnings as a result of an increase in revenues from oil and gas production. Conversely, a decline in crude oil prices reduces revenues. The impact of changes in crude oil prices on Downstream and Chemicals operations depends upon the speed at which the prices of finished products adjust to reflect these changes. All of the Group’s activities are, to various degrees, sensitive to fluctuations in the dollar/euro exchange rate.
ITEM 12. DESCRIPTION OF SECURITIES OTHER THAN EQUITY SECURITIES American Depositary Receipts fees and charges The Bank of New York Mellon, as a depositary, collects its fees for delivery and surrender of ADSsADRs directly from investors depositing shares or surrendering ADSsADRs for the purpose of withdrawal or from intermediaries acting for them. The depositary collects fees for making distributions to investors by deducting those fees from the amounts distributed or by selling a portion of distributable property to pay the fees. The depositary may generally refuse to provide fee-attracting services until its fees for those services are paid. | | | Investors must pay: | | For: | $5.00 (or less) per 100 ADSs (or portion of 100 ADSs) | | • Issuance of ADSs,ADRs, including issuances resulting from a distribution of shares or rights or other property, stocks splits or merger • Cancellation of ADSsADRs for the purpose of withdrawal, including if the deposit agreement terminates | | | A fee equivalent to the fee that would be payable if securities distributed to the investor had been shares and the shares had been deposited for issuance of ADSs | | • Distribution of securities distributed to holders of deposited securities that are distributed by the depositary to ADS registered holders | | | Registration or transfer fees | | • Transfer and registration of shares on the Company’s share register to or from the name of the depositary or its agent when the investor deposits or withdraws shares | | | Expenses of the depositary | | • Cable, telex and facsimile transmissions (when expressly provided in the deposit agreement) • Converting foreign currency to U.S. dollars | | | Taxes and other governmental charges the depositary or the custodian have to pay on any ADS or share underlying an ADS, for example, stock transfer taxes, stamp duty or withholding taxes | | • As necessary | | | Any charges incurred by the depositary or its agents for servicing the deposited securities | | • As necessary |
The depositary has agreed to reimburse expenses (“Reimbursed Expenses”) incurred by the Company for certain expenses incurred in connection with the establishment and maintenance of the ADS program. The depositary has agreedprogram that include, but are not limited to, reimburse the Company for its continuing annual stock exchange listing fees, and annual meeting expenses. The depositary has also agreed to pay theexpenses, standard out-of-pocket maintenance costs for the ADRs which consist of(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. It has also agreed to reimburse the Company annually for certain investor relationship programs or specialcalls), shareholder identification, investor relations promotional activities.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. In the year ended December 31, 2009,From March 16, 2011 to March 15, 2012, the Company received from the depositary a payment of $586,590, consisting of an amount of $222,243$3,327,796.00 with respect to continuing annual stock exchange listing fees and an amount of $364,347 with respect to annual general meeting of shareholders related expenses in connection with the ADS program, standard out-of-pocket maintenance costs for the ADRs, expenses for investor relations promotional activities, and legal fees. From January 1 to March 15, 2010, the Company received from the depositary a payment of $545,530 corresponding to standard out-of-pocket maintenance costs for the ADRs, expenses for investor relations promotional activities and legal fees.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, 2009.2011. The effectiveness of internal control over financial reporting as of December 31, 2009,2011, 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. Bertrand JacquillatMs. Patricia Barbizet is the Audit Committee financial expert. Mr. JacquillatMs. Barbizet is an independent member of the Board of Directors in accordance with the NYSE listing
standards applicable to TOTAL, as are the other members of the Audit Committee.
ITEM 16B. CODE OF ETHICS At its meeting on February 18, 2004, the Board of Directors adopted a code of ethics that applies to its Chief Executive Officer, Chief Financial Officer, Chief Accounting 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, 20092011 and 2008,2010, 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€) | | 2009 | | 2008 | | 2009 | | 2008 | | 2011 | | | 2010 | | | 2011 | | | 2010 | | Audit Fees | | 16.0 | | 15.9 | | 17.7 | | 17.7 | | | 14.1 | | | | 15.1 | | | | 15.6 | | | | 15.2 | | Audit-Related Fees(a) | | 2.9 | | 3.4 | | 0.8 | | 1.0 | | | 3.8 | | | | 3.6 | | | | 1.9 | | | | 0.7 | | Tax Fees(b) | | 1.2 | | 1.2 | | 1.4 | | 1.8 | | | 1.6 | | | | 1.2 | | | | 1.4 | | | | 1.7 | | All Other Fees(c) | | 0.3 | | 0.2 | | 0.1 | | 0.0 | | | 0.2 | | | | 0.1 | | | | 0.2 | | | | 0.2 | | Total | | 20.4 | | 20.7 | | 20.0 | | 20.5 | | | 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 and that are not prohibited by regulatory or other professional requirements. This policy provides for both pre-approval of certain types of services through the use of an annual budget approved by the Audit Committee for these types of services and special pre-approval of services by the Audit Committee on a case-by-case basis. The Audit Committee reviews on an annual basis the services provided by the statutory auditors. During 2009,2011, 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(a)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 Yet Be Purchased Under The Plans Or
Programs(b) | | January 20092011 | | | — | | | | — | | | | — | | 94,103,139 | | 122,526,633 | | February 20092011 | | | — | | | | — | | | | — | | 94,121,817 | | 122,588,776 | | March 20092011 | | | — | | | | — | | | | — | | 94,156,488 | | 122,626,999 | | April 20092011 | | | — | | | | — | | | | — | | 94,157,270 | | 123,539,732 | | May 20092011 | | | — | | | | — | | | | — | | 94,186,799 | | 123,567,601 | | June 20092011 | | | — | | | | — | | | | — | | 94,207,296 | | 123,655,175 | | July 20092011 | | | — | | | | — | | | | — | | 118,852,285 | | 123,891,589 | | August 20092011 | | | — | | | | — | | | | — | | 118,858,302 | | 123,892,274 | | September 20092011 | | | — | | | | — | | | | — | | 118,890,718 | | 126,818,649 | | October 20092011 | | | — | | | | — | | | | — | | 118,927,422 | | 126,819,834 | | November 20092011 | | | — | | | | — | | | | — | | 119,044,527 | | 126,822,199 | | December 20092011 | | | — | | | | — | | | | — | | 119,435,098 | | 126,822,558 | | January 20102012 | | | — | | | | — | | | | — | | 119,798,107 | | 126,824,217 | | February 20102012 | | | — | | | | — | | | | — | | 119,813,214 | | 126,836,267 | |
(a) | The shareholders’ meeting of May 15, 2009,13, 2011, cancelled and replaced the previous resolution from the shareholders’ meeting of May 19, 2008,21, 2010, authorizing the Board of Directors to trade in the Company’s own shares on the market for a period of 18 months within the framework of the stock purchase program. The maximum number of shares that may be purchased by virtue of this authorization or under the previous authorization may not exceed 10% of the total number of shares constituting the share capital, this amount being periodically adjusted to take into account operations modifying the share capital after each shareholders’ meeting. Under no circumstances may the total number of shares the Company holds, either directly or indirectly through its subsidiaries, exceed 10% of the share capital. |
(b) | Based on 10% of the Company’s share capital, and after deducting the shares held by the Company for cancellation and the shares held by the Company to cover the share purchase option plans for Company employees and restricted share grants for Company employees, as well as after deducting the shares held by the subsidiaries. |
ITEM 16F. CHANGE IN REGISTRANT’S CERTIFYING ACCOUNTANT Not applicable. 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 at its meeting on February 9, 2012, examined the independence of the Company’s directors on February 10, 2010,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 OfficerClément, director representing employee 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 (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 Company,five-year period should not be higher than two. Any appointment of a director made in violation of these rules shall be declared null and Mrs. Lauvergeon, Chairpersonvoid and the payment of the Management Boarddirectors’ compensation shall be suspended until the board composition complies with the law’s requirements (the management report shall also indicate the suspension of the company where Mr. Desmarest wasdirectors’ compensation until the board composition complies with the law’s requirements). However, decisions of a memberboard of the Supervisory Board atdirectors that time.(1)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
1. | Mr. Desmarest was a member of the Supervisory Board of Areva until March 4, 2010. |
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 shareholders’ meeting may rely on proposals submitted to it by the board of directors, the decision of the latter being taken upon consultation with the audit committee. The shareholders’ meeting elects the auditors for an audit period of six fiscal years. The auditors may only be dismissed by a court and only on grounds of professional negligence or incapacity to perform their mission. Disclosure The NYSE listing standards require U.S. listed companies to adopt, and post on their websites, a set of corporate governance guidelines. The guidelines must address, among other things: director qualification standards, director responsibilities, director access to management and independent advisers, director compensation, director orientation and continuing education, management succession, and an annual performance evaluation of the board. In addition, the chief executive officer of a U.S. listed company must certify to the NYSE annually that he or she is not aware of any violations by the company of the NYSE’s corporate governance listing standards. French law requires neither the adoption of such guidelines nor the provision of such certification. The AFEP-MEDEF Code recommends, however, that the board of directors of a French listed company perform an annual review of its operation and that a formal evaluation, possibly with the assistance of an outside consultant, be undertaken every three years, which for TOTAL took place endin early 2012 without the assistance of 2009,an outside consultant, and that shareholders be informed each year in the annual report of the evaluations. In addition, the AFEP-MEDEF Code addresses deontology rules that the directors are expected to comply with. Code of business conduct and ethics The NYSE listing standards require each U.S. listed company to adopt, and post on its website, a code of business conduct and ethics for its directors, officers and employees. There is no similar requirement or recommendation under French law. However, under the SEC’s rules and regulations, all companies required to submit periodic reports to the SEC, including TOTAL, must disclose in their annual reports whether they have adopted a code of ethics for their principal executive officer and senior financial officers. In addition, they must file a copy of the code with the SEC, post the text of the code on their website or undertake to provide a copy upon request to any person without charge. There is significant, though not complete, overlap between the code of ethics required by the NYSE listing standards and the code of ethics for senior financial officers required by the SEC’s rules. For a discussion of the code of ethics adopted by TOTAL, see “Item 6. Corporate Governance” and “Item 16B. Code of Ethics”.
ITEM 17. FINANCIAL STATEMENTS Not applicable. ITEM 18. FINANCIAL STATEMENTS The following financial statements, together with the report of Ernst & Young Audit and KPMG S.A. thereon, are held as part of this annual report. | | | | | | | Page | | Report of Independent Registered Public Accounting Firms on the Consolidated Financial Statements | | | F-1 | | Report of Independent Registered Public Accounting Firms on the Internal Control over Financial Reporting | | | F-2 | | Consolidated Statement of Income for the Years Ended December 31, 2009, 20082011, 2010 and 20072009 | | | 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, 2009, 20082011, 2010 and 20072009 | | F-4 | F-5 | | Consolidated Statement of Cash Flow for the Years Ended December 31, 2009, 20082011, 2010 and 20072009 | | F-5 | F-6 | | Consolidated Statement of Changes in Shareholders’ Equity for the years endedYears Ended December 31, 2009, 20082011, 2010 and 20072009 | | F-6 | Consolidated Statement of Comprehensive Income F-7 | | F-7 | Notes to the Consolidated Financial Statements | | | F-8 | | | | Supplemental Oil and Gas Information (Unaudited) | | | S-1 | |
Schedules have been omitted since they are not required under the applicable instructions or the substance of the required information is shown in the financial statements. 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, 2009)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 1, 2010March 26, 2012 REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRMS ON THE CONSOLIDATED FINANCIAL STATEMENTS Year ended December 31, 20092011 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, 2009, 20082011, 2010 and 2007,2009, and the related consolidated statements of income, comprehensive income, cash flows and changes in shareholders’ equity and comprehensive income for each of the three years in the period ended December 31, 2009.2011. 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, 2009, 20082011, 2010 and 2007,2009, and the consolidated results of its operations and its consolidated cash flows for each of the three years in the period ended December 31, 2009,2011, in conformity with International Financial Reporting Standards as adopted by the European Union and in conformity with International Financial Reporting Standards as issued by the International Accounting Standards Board. As discussed in the Introduction of the Notes to the consolidated financial statements, the Company has changed its 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.
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, 2009,2011, based on criteria established in Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (the COSO criteria) and our report dated March 8, 20107, 2012 expressed an unqualified opinion on the effectiveness of the Company’s internal control over financial reporting. Paris La Défense, March 8, 20107, 2012 | | | | | | | KPMG AUDITAudit A division of KPMG S.A. | | ERNST & YOUNG Audit | A division of KPMG S.A. | | | /s/ JAY NIRSIMLOO | | /s/ PASCAL MACIOCE | Jay Nirsimloo
Partner
| | /s/ LAURENT VITSE | Jay Nirsimloo | | Pascal Macioce | | Laurent Vitse | Partner
| | Partner | | Partner |
F-1
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRMS ON THE INTERNAL CONTROL OVER FINANCIAL REPORTING Year ended December 31, 20092011 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, 2009,2011, based on criteria established in Internal Control —- Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (the COSO criteria). The Company’s management is responsible for maintaining effective internal control over financial reporting, and for its assessment of the effectiveness of internal control over financial reporting included in the accompanying management’s annual report on internal control over financial reporting. Our responsibility is to express an opinion on the Company’s internal control over financial reporting based on our audit. We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects. Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. Our audit also included performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion. A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of the company’s assets that could have a material effect on the financial statements. Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate. In our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, 2009,2011, 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, 2009, 20082011, 2010 and 20072009 and the related consolidated statements of income, comprehensive income, cash flows and changes in shareholders’ equity and comprehensive income for each of the three years in the period ended December 31, 2009,2011, and our report dated March 8, 20107, 2012 expressed an unqualified opinion on those consolidated financial statements. Paris La Défense, March 8, 20107, 2012 | | | | | | | KPMG Audit A division of KPMG S.A. | | ERNST & YOUNG Audit | A division of KPMG S.A. | | | /s/ JAY NIRSIMLOO | | /s/ PASCAL MACIOCE | | /s/ LAURENT VITSE | Jay Nirsimloo | | Pascal Macioce | | Laurent Vitse | Partner | | Partner | | Partner |
CONSOLIDATED STATEMENT OF INCOME TOTAL | For the year ended December 31,(€ million)(a) | | | 2009 | | 2008 | | 2007 | | | For the year ended December 31, (M€)(a) | | | | | 2011 | | 2010 | | 2009 | | Sales | | (Notes 4 & 5) | | 131,327 | | | 179,976 | | | 158,752 | | | | (Notes 4 & 5 | ) | | | 184,693 | | | | 159,269 | | | | 131,327 | | Excise taxes | | | | (19,174 | ) | | (19,645 | ) | | (21,928 | ) | | | | | (18,143 | ) | | | (18,793 | ) | | | (19,174 | ) | Revenues from sales | | | | 112,153 | | | 160,331 | | | 136,824 | | | | | | 166,550 | | | | 140,476 | | | | 112,153 | | | Purchases net of inventory variation | | (Note 6) | | (71,058 | ) | | (111,024 | ) | | (87,807 | ) | | | (Note 6 | ) | | | (113,892 | ) | | | (93,171 | ) | | | (71,058 | ) | Other operating expenses | | (Note 6) | | (18,591 | ) | | (19,101 | ) | | (17,414 | ) | | | (Note 6 | ) | | | (19,843 | ) | | | (19,135 | ) | | | (18,591 | ) | Exploration costs | | (Note 6) | | (698 | ) | | (764 | ) | | (877 | ) | | | (Note 6 | ) | | | (1,019 | ) | | | (864 | ) | | | (698 | ) | Depreciation, depletion and amortization of tangible assets and mineral interests | | | | (6,682 | ) | | (5,755 | ) | | (5,425 | ) | | | | | (7,506 | ) | | | (8,421 | ) | | | (6,682 | ) | Other income | | (Note 7) | | 314 | | | 369 | | | 674 | | | | (Note 7 | ) | | | 1,946 | | | | 1,396 | | | | 314 | | Other expense | | (Note 7) | | (600 | ) | | (554 | ) | | (470 | ) | | | (Note 7 | ) | | | (1,247 | ) | | | (900 | ) | | | (600 | ) | | Financial interest on debt | | | | (530 | ) | | (1,000 | ) | | (1,783 | ) | | | | | (713 | ) | | | (465 | ) | | | (530 | ) | Financial income from marketable securities & cash equivalents | | | | 132 | | | 473 | | | 1,244 | | | | | | 273 | | | | 131 | | | | 132 | | Cost of net debt | | (Note 29) | | (398 | ) | | (527 | ) | | (539 | ) | | | (Note 29 | ) | | | (440 | ) | | | (334 | ) | | | (398 | ) | Other financial income | | (Note 8) | | 643 | | | 728 | | | 643 | | | | (Note 8 | ) | | | 609 | | | | 442 | | | | 643 | | Other financial expense | | (Note 8) | | (345 | ) | | (325 | ) | | (274 | ) | | | (Note 8 | ) | | | (429 | ) | | | (407 | ) | | | (345 | ) | | Equity in income (loss) of affiliates | | (Note 12) | | 1,642 | | | 1,721 | | | 1,775 | | | | (Note 12 | ) | | | 1,925 | | | | 1,953 | | | | 1,642 | | | Income taxes | | (Note 9) | | (7,751 | ) | | (14,146 | ) | | (13,575 | ) | | | (Note 9 | ) | | | (14,073 | ) | | | (10,228 | ) | | | (7,751 | ) | Consolidated net income | | | 8,629 | | | 10,953 | | | 13,535 | | | | | 12,581 | | | | 10,807 | | | | 8,629 | | Group share | | | | 8,447 | | | 10,590 | | | 13,181 | | | | | | 12,276 | | | | 10,571 | | | | 8,447 | | Minority interests | | | 182 | | | 363 | | | 354 | | | Non-controlling interests | | | | | 305 | | | | 236 | | | | 182 | | Earnings per share (€) | | | | 3.79 | | | 4.74 | | | 5.84 | | | | | | 5.46 | | | | 4.73 | | | | 3.79 | | Fully-diluted earnings per share (€) | | | 3.78 | | | 4.71 | | | 5.80 | | | | | 5.44 | | | | 4.71 | | | | 3.78 | |
(a) | Except for per share amounts. |
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,(€ million) | | | 2009 | | 2008 | | 2007 | | | As of December 31, (M€) | | | | | 2011 | | 2010 | | 2009 | | ASSETS | | | | | | | | | | | | | | | | | Non-current assets | | | | | | | | | | | | | | | | | Intangible assets, net | | (Notes 5 & 10) | | 7,514 | | | 5,341 | | | 4,650 | | | | (Notes 5 & 10 | ) | | | 12,413 | | | | 8,917 | | | | 7,514 | | Property, plant and equipment, net | | (Notes 5 & 11) | | 51,590 | | | 46,142 | | | 41,467 | | | | (Notes 5 & 11 | ) | | | 64,457 | | | | 54,964 | | | | 51,590 | | Equity affiliates: investments and loans | | (Note 12) | | 13,624 | | | 14,668 | | | 15,280 | | | | (Note 12 | ) | | | 12,995 | | | | 11,516 | | | | 13,624 | | Other investments | | (Note 13) | | 1,162 | | | 1,165 | | | 1,291 | | | | (Note 13 | ) | | | 3,674 | | | | 4,590 | | | | 1,162 | | Hedging instruments of non-current financial debt | | (Note 20) | | 1,025 | | | 892 | | | 460 | | | | (Note 20 | ) | | | 1,976 | | | | 1,870 | | | | 1,025 | | Other non-current assets | | (Note 14) | | 3,081 | | | 3,044 | | | 2,155 | | | | (Note 14 | ) | | | 4,871 | | | | 3,655 | | | | 3,081 | | Total non-current assets | | | 77,996 | | | 71,252 | | | 65,303 | | | | | | 100,386 | | | | 85,512 | | | | 77,996 | | Current assets | | | | | | | | | | | | | | | | | Inventories, net | | (Note 15) | | 13,867 | | | 9,621 | | | 13,851 | | | | (Note 15 | ) | | | 18,122 | | | | 15,600 | | | | 13,867 | | Accounts receivable, net | | (Note 16) | | 15,719 | | | 15,287 | | | 19,129 | | | | (Note 16 | ) | | | 20,049 | | | | 18,159 | | | | 15,719 | | Other current assets | | (Note 16) | | 8,198 | | | 9,642 | | | 8,006 | | | | (Note 16 | ) | | | 10,767 | | | | 7,483 | | | | 8,198 | | Current financial assets | | (Note 20) | | 311 | | | 187 | | | 1,264 | | | | (Note 20 | ) | | | 700 | | | | 1,205 | | | | 311 | | Cash and cash equivalents | | (Note 27) | | 11,662 | | | 12,321 | | | 5,988 | | | | (Note 27 | ) | | | 14,025 | | | | 14,489 | | | | 11,662 | | Total current assets | | | 49,757 | | | 47,058 | | | 48,238 | | | | | 63,663 | | | | 56,936 | | | | 49,757 | | Assets classified as held for sale | | | | (Note 34 | ) | | | — | | | | 1,270 | | | | — | | Total assets | | | 127,753 | | | 118,310 | | | 113,541 | | | | | 164,049 | | | | 143,718 | | | | 127,753 | | LIABILITIES & SHAREHOLDERS’ EQUITY | | | | | | | | | | | | | | | | | Shareholders’ equity | | | | | | | | | | | | | | | | | Common shares | | | | 5,871 | | | 5,930 | | | 5,989 | | | | | | 5,909 | | | | 5,874 | | | | 5,871 | | Paid-in surplus and retained earnings | | | | 55,372 | | | 52,947 | | | 48,797 | | | | | | 66,506 | | | | 60,538 | | | | 55,372 | | Currency translation adjustment | | | | (5,069 | ) | | (4,876 | ) | | (4,396 | ) | | | | | (988 | ) | | | (2,495 | ) | | | (5,069 | ) | Treasury shares | | | (3,622 | ) | | (5,009 | ) | | (5,532 | ) | | | | (3,390 | ) | | | (3,503 | ) | | | (3,622 | ) | Total shareholders’ equity - Group share | | (Note 17) | | 52,552 | | | 48,992 | | | 44,858 | | | Minority interests | | | 987 | | | 958 | | | 842 | | | Total shareholders’ equity — Group share | | | | (Note 17 | ) | | | 68,037 | | | | 60,414 | | | | 52,552 | | Non-controlling interests | | | | | 1,352 | | | | 857 | | | | 987 | | Total shareholders’ equity | | | 53,539 | | | 49,950 | | | 45,700 | | | | | | 69,389 | | | | 61,271 | | | | 53,539 | | Non-current liabilities | | | | | | | | | | | | | | | | | Deferred income taxes | | (Note 9) | | 8,948 | | | 7,973 | | | 7,933 | | | | (Note 9 | ) | | | 12,260 | | | | 9,947 | | | | 8,948 | | Employee benefits | | (Note 18) | | 2,040 | | | 2,011 | | | 2,527 | | | | (Note 18 | ) | | | 2,232 | | | | 2,171 | | | | 2,040 | | Provisions and other non-current liabilities | | (Note 19) | | 9,381 | | | 7,858 | | | 6,843 | | | | (Note 19 | ) | | | 10,909 | | | | 9,098 | | | | 9,381 | | Non-current financial debt | | | | (Note 20 | ) | | | 22,557 | | | | 20,783 | | | | 19,437 | | Total non-current liabilities | | | 20,369 | | | 17,842 | | | 17,303 | | | | | 47,958 | | | | 41,999 | | | | 39,806 | | Non-current financial debt | | (Note 20) | | 19,437 | | | 16,191 | | | 14,876 | | | Current liabilities | | | | | | | | | | | | | | | | | Accounts payable | | | | 15,383 | | | 14,815 | | | 18,183 | | | | | | 22,086 | | | | 18,450 | | | | 15,383 | | Other creditors and accrued liabilities | | (Note 21) | | 11,908 | | | 11,632 | | | 12,806 | | | | (Note 21 | ) | | | 14,774 | | | | 11,989 | | | | 11,908 | | Current borrowings | | (Note 20) | | 6,994 | | | 7,722 | | | 4,613 | | | | (Note 20 | ) | | | 9,675 | | | | 9,653 | | | | 6,994 | | Other current financial liabilities | | (Note 20) | | 123 | | | 158 | | | 60 | | | | (Note 20 | ) | | | 167 | | | | 159 | | | | 123 | | Total current liabilities | | | 34,408 | | | 34,327 | | | 35,662 | | | | | 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 | | | 127,753 | | | 118,310 | | | 113,541 | | | | | 164,049 | | | | 143,718 | | | | 127,753 | |
CONSOLIDATED STATEMENT OF CASH FLOW TOTAL (Note 27) | | | | | | | | | | (Note 27) | | | | | | | | | | For the year ended December 31,(€ million) | | 2009 | | | 2008 | | | 2007 | | CASH FLOW FROM OPERATING ACTIVITIES | | | | | | | | | | Consolidated net income | | 8,629 | | | 10,953 | | | 13,535 | | Depreciation, depletion and amortization | | 7,107 | | | 6,197 | | | 5,946 | | Non-current liabilities, valuation allowances, and deferred taxes | | 441 | | | (150 | ) | | 826 | | Impact of coverage of pension benefit plans | | — | | | (505 | ) | | — | | (Gains) losses on disposals of assets | | (200 | ) | | (257 | ) | | (639 | ) | Undistributed affiliates’ equity earnings | | (378 | ) | | (311 | ) | | (821 | ) | (Increase) decrease in working capital | | (3,316 | ) | | 2,571 | | | (1,476 | ) | Other changes, net | | 77 | | | 171 | | | 315 | | Cash flow from operating activities | | 12,360 | | | 18,669 | | | 17,686 | | CASH FLOW USED IN INVESTING ACTIVITIES | | | | | | | | | | Intangible assets and property, plant and equipment additions | | (11,849 | ) | | (11,861 | ) | | (10,549 | ) | Acquisitions of subsidiaries, net of cash acquired | | (160 | ) | | (559 | ) | | (20 | ) | Investments in equity affiliates and other securities | | (400 | ) | | (416 | ) | | (351 | ) | Increase in non-current loans | | (940 | ) | | (804 | ) | | (802 | ) | Total expenditures | | (13,349 | ) | | (13,640 | ) | | (11,722 | ) | Proceeds from disposals of intangible assets and property, plant and equipment | | 138 | | | 130 | | | 569 | | Proceeds from disposals of subsidiaries, net of cash sold | | — | | | 88 | | | 5 | | Proceeds from disposals of non-current investments | | 2,525 | | | 1,233 | | | 527 | | Repayment of non-current loans | | 418 | | | 1,134 | | | 455 | | Total divestments | | 3,081 | | | 2,585 | | | 1,556 | | Cash flow used in investing activities | | (10,268 | ) | | (11,055 | ) | | (10,166 | ) | CASH FLOW USED IN FINANCING ACTIVITIES | | | | | | | | | | Issuance (repayment) of shares: | | | | | | | | | | - Parent company shareholders | | 41 | | | 262 | | | 89 | | - Treasury shares | | 22 | | | (1,189 | ) | | (1,526 | ) | - Minority shareholders | | — | | | (4 | ) | | 2 | | Dividends paid: | | | | | | | | | | - Parent company shareholders | | (5,086 | ) | | (4,945 | ) | | (4,510 | ) | - Minority shareholders | | (189 | ) | | (213 | ) | | (228 | ) | Net issuance (repayment) of non-current debt | | 5,522 | | | 3,009 | | | 3,220 | | Increase (decrease) in current borrowings | | (3,124 | ) | | 1,437 | | | (2,654 | ) | Increase (decrease) in current financial assets and liabilities | | (54 | ) | | 850 | | | 2,265 | | Cash flow used in financing activities | | (2,868 | ) | | (793 | ) | | (3,342 | ) | Net increase (decrease) in cash and cash equivalents | | (776 | ) | | 6,821 | | | 4,178 | | Effect of exchange rates | | 117 | | | (488 | ) | | (683 | ) | Cash and cash equivalents at the beginning of the period | | 12,321 | | | 5,988 | | | 2,493 | | Cash and cash equivalents at the end of the period | | 11,662 | | | 12,321 | | | 5,988 | |
| | | | | | | | | | | | | 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 | | | Common shares issued | | Paid-in surplus and retained earnings | | | Currency translation adjustment | | | Treasury shares | | Shareholders’ equity - Group share | | | Non-controlling interests | | | Total shareholders’ equity | | (€ million) | | Number | | Amount | | Number | | Amount | | | As of January 1, 2007 | | 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 | | | Other comprehensive income (Note 17) | | — | | | — | | | 117 | | | (3,013 | ) | | — | | | — | | | (2,896 | ) | | (111 | ) | | (3,007 | ) | | Comprehensive income | | — | | | — | | | 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(a) | | — | | | — | | | (77 | ) | | — | | | 9,161,830 | | | 341 | | | 264 | | | — | | | 264 | | | Share-based payments (Note 25) | | — | | | — | | | 196 | | | — | | | | | | | 196 | | | — | | | 196 | | | Other operations with minority interests | | — | | | — | | | — | | | — | | | — | | | — | | | — | | | Share cancellation (Note 17) | | (33,005,000 | ) | | (82 | ) | | (1,652 | ) | | — | | | 33,005,000 | | | 1,734 | | | — | | | — | | | — | | | Transactions with shareholders | | (30,235,856 | ) | | (75 | ) | | (5,961 | ) | | — | | | 9,779,475 | | | 288 | | | (5,748 | ) | | (228 | ) | | (5,976 | ) | | 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 | | | Other comprehensive income (Note 17) | | — | | | — | | | (258 | ) | | (480 | ) | | — | | | — | | | (738 | ) | | (34 | ) | | (772 | ) | | Comprehensive income | | — | | | — | | | 10,332 | | | (480 | ) | | — | | | — | | | 9,852 | | | 329 | | | 10,181 | | | Dividend | | — | | | — | | | (4,945 | ) | | — | | | — | | | — | | | (4,945 | ) | | (213 | ) | | (5,158 | ) | | Issuance of common shares (Note 17) | | 6,275,977 | | | 16 | | | 246 | | | — | | | — | | | — | | | 262 | | | — | | | 262 | | | Purchase of treasury shares | | — | | | — | | | — | | | — | | | (27,600,000 | ) | | (1,339 | ) | | (1,339 | ) | | — | | | (1,339 | ) | | Sale of treasury shares(a) | | — | | | — | | | (71 | ) | | — | | | 5,939,137 | | | 221 | | | 150 | | | — | | | 150 | | | Share-based payments (Note 25) | | — | | | — | | | 154 | | | — | | | | | | | 154 | | | — | | | 154 | | | Other operations with minority interests | | — | | | — | | | — | | | — | | | — | | | — | | | — | | | Share cancellation (Note 17) | | (30,000,000 | ) | | (75 | ) | | (1,566 | ) | | — | | | 30,000,000 | | | 1,641 | | | — | | | — | | | — | | | Transactions with shareholders | | (23,724,023 | ) | | (59 | ) | | (6,182 | ) | | — | | | 8,339,137 | | | 523 | | | (5,718 | ) | | (213 | ) | | (5,931 | ) | | As of December 31, 2008 | | 2,371,808,074 | | | 5,930 | | | 52,947 | | | (4,876 | ) | | (143,082,095 | ) | | (5,009 | ) | | 48,992 | | | 958 | | | 49,950 | | | (M€) | | | Number | | Amount | | Paid-in surplus and retained earnings | | | Currency translation adjustment | | | Number | | Amount | | Shareholders’ equity - Group share | | | Non-controlling interests | | | Total shareholders’ equity | | As of Janurary 1, 2009 | | | | 2,371,808,074 | | | | 5,930 | | | | (143,082,095 | ) | | | (5,009 | ) | | Net income 2009 | | — | | | — | | | 8,447 | | | — | | | — | | | — | | | 8,447 | | | 182 | | | 8,629 | | | | — | | | | — | | | | 8,447 | | | | — | | | | — | | | | — | | | | 8,447 | | | | 182 | | | | 8,629 | | Other comprehensive income (Note 17) | | — | | | — | | | 246 | | | (193 | ) | | — | | | — | | | 53 | | | 60 | | | 113 | | | | — | | | | — | | | | 246 | | | | (193 | ) | | | — | | | | — | | | | 53 | | | | 60 | | | | 113 | | Comprehensive income | | — | | | — | | | 8,693 | | | (193 | ) | | — | | | — | | | 8,500 | | | 242 | | | 8,742 | | | | — | | | | — | | | | 8,693 | | | | (193 | ) | | | — | | | | — | | | | 8,500 | | | | 242 | | | | 8,742 | | Dividend | | — | | | — | | | (5,086 | ) | | — | | | — | | | — | | | (5,086 | ) | | (189 | ) | | (5,275 | ) | | | — | | | | — | | | | (5,086 | ) | | | — | | | | — | | | | — | | | | (5,086 | ) | | | (189 | ) | | | (5,275 | ) | Issuance of common shares (Note 17) | | 1,414,810 | | | 3 | | | 38 | | | — | | | — | | | — | | | 41 | | | — | | | 41 | | | | 1,414,810 | | | | 3 | | | | 38 | | | | — | | | | — | | | | — | | | | 41 | | | | — | | | | 41 | | Purchase of treasury shares | | — | | | — | | | — | | | — | | | — | | | — | | | — | | | — | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | Sale of treasury shares(a) | | — | | | — | | | (143 | ) | | — | | | 2,874,905 | | | 165 | | | 22 | | | — | | | 22 | | | | — | | | | — | | | | (143 | ) | | | — | | | | 2,874,905 | | | | 165 | | | | 22 | | | | — | | | | 22 | | Share-based payments (Note 25) | | — | | | — | | | 106 | | | — | | | — | | | — | | | 106 | | | — | | | 106 | | | | — | | | | — | | | | 106 | | | | — | | | | — | | | | — | | | | 106 | | | | — | | | | 106 | | Other operations with minority interests | | — | | | — | | | (23 | ) | | — | | | — | | | — | | | (23 | ) | | (24 | ) | | (47 | ) | | Share cancellation (Note 17) | | (24,800,000 | ) | | (62 | ) | | (1,160 | ) | | — | | | 24,800,000 | | | 1,222 | | | — | | | — | | | — | | | | (24,800,000 | ) | | | (62 | ) | | | (1,160 | ) | | | — | | | | 24,800,000 | | | | 1,222 | | | | — | | | | — | | | | — | | Transactions with shareholders | | (23,385,190 | ) | | (59 | ) | | (6,268 | ) | | — | | | 27,674,905 | | | 1,387 | | | (4,940 | ) | | (213 | ) | | (5,153 | ) | | 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 | | | | 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. |
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME(a)
TOTAL | | | | | | | | | | For the year ended December 31,(€ million) | | 2009 | | | 2008 | | | 2007 | | Consolidated net income | | 8,629 | | | 10,953 | | | 13,535 | | Other comprehensive income | | | | | | | | | | Currency translation adjustment | | (244 | ) | | (722 | ) | | (2,703 | ) | Available for sale financial assets | | 38 | | | (254 | ) | | 111 | | Cash flow hedge | | 128 | | | — | | | — | | Share of other comprehensive income of associates, net amount | | 234 | | | 173 | | | (406 | ) | Other | | (5 | ) | | 1 | | | (3 | ) | | | | | | | | | — | | Tax effect | | (38 | ) | | 30 | | | (6 | ) | Total other comprehensive income (net amount) (note 17) | | 113 | | | (772 | ) | | (3,007 | ) | Comprehensive income | | 8,742 | | | 10,181 | | | 10,528 | | - Group share | | 8,500 | | | 9,852 | | | 10,285 | | - Minority interests | | 242 | | | 329 | | | 243 | |
(a) | In accordance with revised IAS 1, applicable from January 1, 2009. |
TOTAL
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS On February 10, 2010,9, 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, 2009,2011, which will be submitted for approval to the shareholders’ meeting to be held on May 21, 2010.11, 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, 2009.2011. The accounting principles applied in the Consolidated Financial Statements as of December 31, 20092011 were the same as those that were used as of December 31, 20082010 except for amendments and interpretations of IFRS which were mandatory for the periods beginning after January 1, 20092011 (and not early adopted). Their adoption has no material impact on the Consolidated Financial Statements as of December 31, 2009. Among these new standards or interpretations, it should be noted that the revised version of IAS 1 “Presentation of financial statements”, effective for annual periods beginning on or after January 1, 2009, resulted in the following:
presentation of the consolidated statement of comprehensive income; and
information on other comprehensive income presented in Note 17 to the Consolidated Financial Statements.
In addition, the IASB issued in 2009 amendments to standard IFRS 7 “Financial instruments: disclosures” which introduce new disclosure requirements, effective for annual periods beginning on or after January 1, 2009. In particular, financial instruments shall be presented according to the fair value measurement method used (three-level hierarchy described in Note 1 M(v) to the Consolidated Financial Statements).
Lastly, the Group has applied the new definitions and the new method of estimating oil & gas reserves resulting from U.S. 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 adoption of these new rules had no significant impact on oil & gas reserve estimates and no significant impact on the Consolidated Financial Statements.2011.
The preparation of financial statements in accordance with IFRS requires the management to make estimates and assumptions that affect the reported amounts of assets, liabilities and contingent liabilities at the date of preparation of the financial statements and reported income and expenses for the period. The management reviews these estimates and assumptions on an ongoing basis, by reference to past experience and various other factors considered as reasonable which form the basis for assessing the carrying amount of assets and liabilities. Actual results may differ significantly from these estimates, if different assumptions or circumstances apply. These judgments and estimates relate principally to the application of the successful efforts method for the oil and gas accounting, the valuation of long-lived assets, the provisions for asset retirement obligations and environmental remediation, the pensions and post-retirements benefits and the income tax computation. Furthermore, where the accounting treatment of a specific transaction is not addressed by any accounting standard or interpretation, the management applies its judgment to define and apply accounting policies that will lead to relevant and reliable information, so that the financial statements: give a true and fair view of the Group’s financial position, financial performance and cash flows; reflect the substance of transactions; 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. through subsidiaries), 20% or more of the voting rights. Companies in which ownership interest is less than 20%, but over which the Company is deemed to exercise significant influence, are also accounted for by the equity method. All significant intercompany balances, transactions and income have beenare eliminated. 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. Transactions denominated in foreign currencies other than the functional currency of the entity are translated at the exchange rate on the transaction date. At each balance sheet date, monetary assets and liabilities are translated at the closing rate and the resulting exchange differences are recognized in “Other income” or “Other expenses”.the statement of income. (ii) | Translation of financial statements denominated in foreign currencies |
Assets and liabilities of foreign entities are translated into euros on the basis of the exchange rates at the end of the period. The income and cash flow statements are translated using the average exchange rates for the period. Foreign exchange differences resulting from such translations are either recorded in shareholders’ equity under “Currency translation adjustments” (for the Group share) or under “Minority“Non-controlling interests” (for the minority share)share of non-controlling interests) as deemed appropriate. D) 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.
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
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. 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
Income taxes disclosed in the statement of income include the current tax expenses and the deferred tax expenses. The Group uses the liability method whereby deferred income taxes are recorded based on the temporary differences between the carrying amounts of assets and liabilities recorded in the balance sheet and their tax bases, and on carry-forwards of unused tax losses and tax credits. Deferred tax assets and liabilities are measured using the tax rates that have been enacted or substantially enacted at the balance sheet date. The tax rates used depend on the timing of reversals of temporary differences, tax losses and other tax credits. The effect of a change in tax rate is recognized either in the Consolidated Statement of Income or in shareholders’ equity depending on the item it relates to. Deferred tax assets are recognized when future recovery is probable. Asset retirement obligations and finance leases give rise to the recognition of assets and liabilities for accounting purposes as described in paragraph K “Leases” and paragraph Q “Asset retirement obligations” of this Note. Deferred income taxes resulting from temporary differences between the carrying amounts and tax bases of such assets and liabilities are recognized. Deferred tax liabilities resulting from temporary differences between the carrying amounts of equity-method investments and their tax bases are recognized. The deferred tax calculation is based on the expected future tax effect (dividend distribution rate or tax rate on the gain or loss upon disposal of these investments). 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
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. Treasury shares held by the parent company, TOTAL S.A., and TOTAL shares held by the Group subsidiaries are deducted from consolidated shareholders’ equity. These shares are not considered outstanding for purposes of this calculation which also takes into account the dilutive effect of stock options, restricted share grants and capital increases with a subscription period closing after the end of the fiscal year. The weighted-average number of fully-diluted shares is calculated in accordance with the treasury stock method provided for by IAS 33. The proceeds, which would be recovered in the event of an exercise of rights related to dilutive instruments, are presumed to be a share buyback at the average market price over the period. The number of shares thereby obtained leads to a
reduction in the total number of shares that would result from the exercise of rights. 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. 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. 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: Machinery and mobile equipment which are significantly costly; 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 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 to the Consolidated Financial Statements “Impairment of long-lived assets”)Statements).
In equity affiliates, goodwill is included in the investment book value. Other intangible assets (except goodwill) have a finite useful life and are amortized on a straight-line basis over 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
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) 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” for property, plant and equipmentmineral interests and mineral interests” or into “Other expense”, respectively. This impairment loss is first allocated to reduce the carrying amount of any goodwill.expenses” for other intangible assets. Impairment losses recognized in prior periods can be reversed up to the original carrying amount, had the impairment loss not been recognized. Impairment losses recognized for goodwill cannot be reversed.
M) 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: 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 long-lasting impairment loss, an impairmenta loss is recorded in the Consolidated Statement of Income. This impairment is reversed in the statement of income only when the securities are sold. These investments are presented in the section “Other investments” of the balance sheet.
(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: Financial instruments used for cash management purposes are part of a hedging strategy of currency and interest rate risks within global limits set by the Group and are considered to be used for transactions (held for trading). Changes in fair value are systematically recorded in the statement of income. The balance sheet value of those instruments is included in “Current financial assets” or “Other current financial liabilities”. When an external long-term financing is set up, specifically to finance subsidiaries, and when this financing involves currency and interest rate derivatives, these instruments are qualified as: | i. | Fair value hedge of the interest rate risk on the external debt and of the currency risk of the loans to subsidiaries. Changes in fair value of derivatives are recognized in the statement of income as are changes in fair value of underlying financial debts and loans to subsidiaries. |
The fair value of those hedging instruments of long-term financing is included in the assets under “Hedging instruments on non-current financial debt” or in the liabilities under “Non-current financial debt “for the non-current portion. The current portion (less than one year) is accounted for in “Current financial assets” or “Other current financial liabilities”. In case of the anticipated termination of derivative instruments accounted for as fair value hedges, the amount paid or received is recognized in the statement of income and: If this termination is due to an early cancellation of the hedged items, the adjustment previously recorded as revaluation of those hedged items is also recognized in the statement of income; If the hedged items remain in the balance sheet, the adjustment previously recorded as a revaluation of those hedged items is spread over the remaining life of those items. | ii. | Cash flow hedge of the currency risk of the external debt. Changes in fair value are recorded in equity for the effective portion of the hedging and in the statement of income for the ineffective portion of the hedging. Amounts recorded in |
| equity are transferred to the income statement when the hedged transaction affects profit or loss. |
The fair value of those hedging instruments of long-term financing is included in the assets under “Hedging instruments on non-current
financial debt” or in the liabilities under “Non-current financial debt” for the non-current portion. The current portion (less than one year) is accounted for in “Current financial assets” or “Other current financial liabilities”. If the hedging instrument expires, is sold or terminated by anticipation, gains or losses previously recognized in equity remain in equity. Amounts are recycled in the income statement only when the hedged transaction affects profit or loss. • | | Foreign subsidiaries’ equity hedge |
Certain financial instruments hedge against risks related to the equity of foreign subsidiaries whose functional currency is not the euro (mainly the dollar). These instruments qualify as “net investment hedges”. Changes in fair value are recorded in shareholders’ equity. The fair value of these instruments is recorded under “Current financial assets” or “Other current financial liabilities”. • | | Financial instruments related to commodity contracts |
Financial instruments related to commodity contracts, including crude oil, petroleum products, gas, power and 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. These instruments are considered, accordingAccording 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 can 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: 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. • | | Financial instruments related to commodity contracts |
The valuation methodology is to mark to market all open positions for both physical and derivativepaper transactions. The valuations are determined on a daily basis using observable market data based on organized and over the counter (OTC) markets. In particular cases when market data are not directly available, the valuations are derived from observable data such as arbitrages, freight or spreads and market corroboration. For valuation of risks which are the result of a calculation, such as options for example, commonly known models are used to compute the fair value. • | | Other financial instruments |
The fair value of the interest rate swaps and of FRA (Forward Rate Agreement) are calculated by discounting future cash flows on the basis of zero coupon interest rate curves existing at year-end after adjustment for interest accrued but unpaid. Forward exchange contracts and currency swaps are valued on the basis of a comparison of the negociated 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. 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 cost price of refined products. Chemicals Costs of chemical products inventories consist of raw material costs, direct labor costs and an allocation of production overhead. Start-up costs and general administrative costs are excluded from the cost of inventories of chemicals products. O) TREASURY SHARES
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 in the period in which the obligation arises. The associated asset retirement costs are capitalized as part of the carrying amount of the underlying asset and depreciated over the useful life of this asset. An entity is required to measure changes in the liability for an asset retirement obligation due to the passage of time (accretion) by applying a risk-free discount rate to the amount of the liability. The increase of the provision due to the passage of time is recognized as “Other financial expense”. R) 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 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 FLOWS
S) | | CONSOLIDATED STATEMENT OF CASH FLOWS |
The Consolidated Statement of Cash Flows prepared in foreign currencies has been translated into euros using the exchange rate on the transaction date or the average exchange rate for the period. Currency translation differences arising from the translation of monetary assets and liabilities denominated in foreign currency into euros using the closing exchange rates are shown in the Consolidated Statement of Cash Flows under “Effect of exchange rates”. Therefore, the Consolidated Statement of Cash Flows will not agree with the figures derived from the Consolidated Balance Sheet. Cash and cash equivalents Cash and cash equivalents are comprised of cash on hand and highly liquid short-term investments that are easily convertible into known amounts of cash and are subject to insignificant risks of changes in value. Investments with maturity greater than three months and less than twelve months are shown under “Current financial assets”. Changes in current financial assets and liabilities are included in the financing activities section of the Consolidated Statement of Cash Flows. Non-current financial debt Changes in non-current financial debt have beenare presented as the 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;
actuarial gains and losses on pension and other post-employment benefit obligations are recognized according to the corridor method (see Note 1 paragraph R to the Consolidated Financial Statements); jointly-controlled entities are consolidated 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, 2009, were2011, are as follows: Revised IFRS 3 “Business Combinations” and 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 9 “Financial Instruments”
In November 2009, the IASB issued standard IFRS 9 “Financial Instruments” that introduces new requirements for the classification and measurement of financial assets. This standard shall be completedassets, and included in October 2010 with requirements regarding classification and measurement of liabilities, derecognition of financial instruments,liabilities. This standard shall be completed with texts on impairment and hedge accounting. Under standard IFRS 9, financial assets and liabilities are generally measured either at fair value through profit or loss or at amortised cost if certain conditions are met. The standard isshould be applicable for annual periods starting on or after January 1, 2013.2015. The application of the standard as published in 20092010 should not have any material effect on the Group’s consolidated balance sheet, statement of income and shareholder’s equity. RevisedIn May 2011, the IASB issued a package of standards on consolidation : standard IFRS 10 “Consolidated financial statements”, standard IFRS 11 “Joint arrangements”, standard IFRS 12 “Disclosure of interests in other entities”, revised standard IAS 24 “Related Party Disclosures”27 “Separate financial statements” and revised standard IAS 28 “Investments in associates and joint ventures”. These standards are applicable for annual periods beginning on or after January 1, 2013. The impact of the application of these standards is currently assessed by the Group.
In November 2009,June 2011, the IASB issued revised standard IAS 24 “Related Party Disclosures” that clarifies19 “Employee benefits”, which leads in particular to the definitionfull recognition of the net position in respect of employee benefits obligations (liabilities net of assets) in the balance sheet, to the elimination of the corridor approach currently used by the Group and to the obligation to evaluate the expected return on plan assets on a related party and reducesnormative basis (via the disclosure requirements for entities controlled by a government. Thediscount rate used to value the debt). This standard is applicable for annual periods startingbeginning on or after January 1, 2011.2013. The impact of the application of this standard should not have any material impact on information presentedis currently assessed by the Group. In addition, the IASB published in the notes to the Consolidated Financial Statements. IFRIC 17 “Distributions of Non-cash Assets 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 fairMay 2011 standard IFRS 13 “Fair value of the net assets to be distributed and that any difference with the carrying amount of the net assets distributed should be recognised in profit or loss. The interpretation is effectivemeasurement”, applicable for annual periods startingbeginning on or after January 1, 2013, and in June 2011 revised standard IAS 1 “Presentation of financial statements”, applicable for annual periods beginning on or after July 1, 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 shareholder’s equity.
IFRIC 19 “Extinguishing Financial Liabilities with Equity Instruments”
In November 2009, the IFRIC issued interpretation IFRIC 19 “Extinguishing Financial Liabilities with Equity Instruments”. The interpretation deals with accounting for debt to equity swaps. It clarifies that equity instruments issued are measured at fair value and that any difference with the carrying amount of the liability is recognised in profit or loss. The interpretation is effective for annual periods starting on or after July 1, 2010 (i.e. starting January 1, 2011 for the Group). The application of IFRIC 19 should not have any material effect on the Group’s consolidated balance sheet, statement of income and shareholder’s equity.
2)MAIN INDICATORS — INFORMATION BY BUSINESS SEGMENT Performance indicators excluding the adjustment items, such as adjusted operating income, adjusted net operating income, and adjusted net income are meant to facilitate the analysis of the financial performance and the comparison of income between periods. Adjustment items The detail of these adjustment items is presented in Note 4 to the Consolidated Financial Statements. Adjustment items include : Adjustment items include: | |
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 facilitate the comparability of the segments’ performance with those of 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) | Effect of changes in fair value |
As from January 1, 2011, the effect of changes in fair value presented as adjustment item reflects for some transactions differences between internal measure of performance used by TOTAL’s management and the accounting for these transactions under IFRS. IFRS requires that trading inventories be recorded at their fair value using period end spot prices. In order to best reflect the management of economic exposure through derivative transactions, internal indicators used to measure performance include valuations of trading inventories based on forward prices. Furthermore, TOTAL, in its trading activities, enters into storage contracts, which future effects are recorded at fair value in Group’s internal economic performance. IFRS precludes recognition of this fair value effect. (iv) | Until June 30, 2010, TOTAL’s equity share of adjustmentsadjustment 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 selected items related to Sanofi-Aventisloss of significant influence over Sanofi) |
Main indicators (i) | Operating income (measure used to evaluate operating performance) |
Revenue from sales after deducting cost of goods sold and inventory variations, other operating expenses, exploration expenses and depreciation, depletion, and amortization. Operating income excludes the amortization of intangible assets other than mineral interests, currency translation adjustments and gains or losses on the disposal of assets. (ii) | Net operating income (measure used to evaluate the return on capital employed) |
Operating income after taking into account the amortization of intangible assets other than mineral interests, currency translation adjustments, gains or losses on the disposal of assets, as well as all other income and expenses related to capital employed (dividends from non-consolidated companies, equity in income of affiliates, capitalized interest expenses), and after income taxes applicable to the above. The only income and expense not included in net operating income but included in net income are interest expenses related to net financial debt, after applicable income taxes (net cost of net debt) and minoritynon-controlling interests. 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. 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. Non-current debt, including current portion, current borrowings, other current financial liabilities less cash and cash equivalents and other current financial assets. 3) 3) | | CHANGES IN THE GROUP STRUCTURE, MAIN ACQUISITIONS AND DIVESTMENTS |
During 2011, 2010 and 2009, main changes in the Group structure and main acquisitions and divestments were as follows: 2011 TOTAL finalized in March 2011 the acquisition from Santos of an additional 7.5% interest in Australia’s GLNG project. This increases TOTAL’s overall stake in the project to 27.5%. The acquisition cost amounts to€202 million ($281 million) and mainly corresponds to the value of mineral interests that have been recognized as intangible assets in the consolidated balance sheet for€227 million. In March 2011, Total E&P Canada Ltd., a TOTAL subsidiary, and Suncor Energy Inc. (Suncor) have finalized a strategic oil sands alliance encompassing the Suncor-operated Fort Hills mining project, the TOTAL-operated Joslyn mining project and the Suncor-operated Voyageur upgrader project. All three assets are located in the Athabasca region of the province of Alberta, in Canada. TOTAL acquired 19.2% of Suncor’s interest in the Fort Hills project, increasing TOTAL’s overall interest in the project to 39.2%. Suncor, as operator, holds 40.8%. TOTAL also acquired a 49% stake in the Suncor-operated Voyageur upgrader project. For those two acquisitions, the Group paid€1,937 million (CAD 2,666 million) mainly representing the value of intangible assets for€474 million and the value of tangible assets for€1,550 million. 2009Furthermore, 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. 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). 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 Total E&P Canada Ltd., a TOTAL subsidiary, signed in July 2010 an agreement with UTS Energy Corporation (UTS) to acquire UTS Corporation with its main asset, a 20% interest in the Fort Hills mining project in the Athabasca region of the Canadian province of Alberta. Total E&P Canada completed on September 30, 2010 the acquisition of all UTS shares for a cash amount of 3.08 Canadian dollars per share. Taking into account the cash held by UTS and acquired by TOTAL (€232 million), the cost of the acquisition for TOTAL amounted to€862 million. This amount mainly represented the value of mineral interests that have been recognized as intangible assets in the consolidated balance sheet for€646 million and the value of tangible assets that have been recognized in the consolidated balance sheet for€217 million. TOTAL completed in September 2010 an agreement for the sale to BP and Hess of its interests in the Valhall (15.72%) and Hod (25%) fields, in the Norwegian North Sea, for an amount of€800 million. TOTAL signed in September 2010 an agreement with Santos and Petronas to acquire a 20% interest in the GLNG project in Australia. Upon completion of this transaction finalised in October 2010, the project brought together Santos (45%, operator), Petronas (35%) and TOTAL (20%). The acquisition cost amounted to€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. | • | | 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). |
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. 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 In December 2009, TOTAL signed an agreement with Chesapeake Energy Corporation whereby TotalTOTAL 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 representsrepresented the value of mineral interests that have been recognized as intangible assets onin the face of the Consolidated Balance Sheetconsolidated balance sheet for€1,449 million and the value of tangible assets that have been recognized onin the face of the Consolidated Balance Sheetconsolidated 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. |
During 2009, TOTAL progressively sold 3.99% of Sanofi-Aventis’ share capital, thus reducing its interest to 7.39%. Sanofi-Aventis is accounted for by the equity method in TOTAL’s Consolidated Financial Statements.Statements for the year ended December 31, 2009. 2008
Pursuant to the tender offer described in the prospectus on May 13, 2008 and renewed by the
| | notices on June 19, July 4 and July 16, 2008, TOTAL acquired 100% of Synenco Energy Inc’s Class A ordinary shares. Synenco’s main asset is a 60% interest in the Northern Lights project in the Athabasca region of the Canadian province of Alberta.
|
The acquisition cost, net of cash acquired (€161 million) for all shares amounted to€352 million. This cost essentially represented the value of the company’s mineral interests that have been recognized as intangible assets on the face of the Consolidated Balance Sheet for€221 million.
Synenco Energy Inc. is fully consolidated in TOTAL’s Consolidated Financial Statements. Its contribution to the consolidated net income for fiscal year 2008 was not material.
In August 2008, TOTAL acquired the Dutch company Goal Petroleum BV. The acquisition cost amounted to€349 million. This cost essentially represented the value of the company’s mineral interests that have been recognized as intangible assets on the face of the Consolidated Balance Sheet for€292 million.
Goal Petroleum BV is fully consolidated in TOTAL’s Consolidated Financial Statements. Its contribution to the consolidated net income for fiscal year 2008 was not material.
Pursuant to the agreements signed between the partners in November 2008, the Group’s participation in the Kashagan field decreased from 18.52% to 16.81%.
During 2008, TOTAL progressively sold 1.68% of Sanofi-Aventis’ share capital, thus reducing its interest to 11.38%. Sanofi-Aventis is accounted for by the equity method in TOTAL’s Consolidated Financial Statements.
2007
Pursuant to the agreements signed in 2007, the Group’s participation in Sincor project in Venezuela decreased from 47% to 30.323%.
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.
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 (including the investment in Sanofi-Aventis)Sanofi). The operational profit and assets are broken down by business segment prior to the consolidation and inter-segment adjustments. Sales prices between business segments approximate market prices.
Furthermore, the Group announced in October 2011 a plan of reorganization of its business segments Downstream and Chemicals. The consultation and notification process towards employee representatives is finished and this reorganization became effective as of January 1st, 2012. A) INFORMATION BY BUSINESS SEGMENTThis plan changed the organization through the creation of:
| | | | | | | | | | | | | | | | | | | For the year ended December 31, 2009 (€ million) | | Upstream | | | Downstream | | | Chemicals | | | Corporate | | | Intercompany | | | Total | | Non-Group sales | | 16,072 | | | 100,518 | | | 14,726 | | | 11 | | | — | | | 131,327 | | Intersegment sales | | 15,958 | | | 3,786 | | | 735 | | | 156 | | | (20,635 | ) | | — | | Excise taxes | | — | | | (19,174 | ) | | — | | | — | | | — | | | (19,174 | ) | Revenues from sales | | 32,030 | | | 85,130 | | | 15,461 | | | 167 | | | (20,635 | ) | | 112,153 | | Operating expenses | | (14,752 | ) | | (81,281 | ) | | (14,293 | ) | | (656 | ) | | 20,635 | | | (90,347 | ) | Depreciation, depletion and amortization of tangible assets and mineral interests | | (4,420 | ) | | (1,612 | ) | | (615 | ) | | (35 | ) | | — | | | (6,682 | ) | Operating income | | 12,858 | | | 2,237 | | | 553 | | | (524 | ) | | — | | | 15,124 | | Equity in income (loss) of affiliates and other items | | 846 | | | 169 | | | (58 | ) | | 697 | | | — | | | 1,654 | | Tax on net operating income | | (7,486 | ) | | (633 | ) | | (92 | ) | | 326 | | | — | | | (7,885 | ) | Net operating income | | 6,218 | | | 1,773 | | | 403 | | | 499 | | | — | | | 8,893 | | Net cost of net debt | | | | | | | | | | | | | | | | | (264 | ) | Minority interests | | | | | | | | | | | | | | | | | (182 | ) | Net income | | | | | | | | | | | | | | | | | 8,447 | |
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, 2009 (adjustments(a)) (€ million) | | Upstream | | | Downstream | | | Chemicals | | | Corporate | | | Intercompany | | Total | | Non-Group sales | | | | | | | | | | | | | | | | | | Intersegment sales | | | | | | | | | | | | | | | | | | Excise taxes | | | | | | | | | | | | | | | | | | Revenues from sales | | | | | | | | | | | | | | | | | | Operating expenses | | (17 | ) | | 1,558 | | | 344 | | | — | | | | | 1,885 | | Depreciation, depletion and amortization of tangible assets and mineral interests | | (4 | ) | | (347 | ) | | (40 | ) | | — | | | | | (391 | ) | Operating income(b) | | (21 | ) | | 1,211 | | | 304 | | | — | | | | | 1,494 | | Equity in income (loss) of affiliates and other items(c) | | (160 | ) | | 22 | | | (123 | ) | | (117 | ) | | | | (378 | ) | Tax on net operating income | | 17 | | | (413 | ) | | (50 | ) | | (3 | ) | | | | (449 | ) | Net operating income(b) | | (164 | ) | | 820 | | | 131 | | | (120 | ) | | | | 667 | | Net cost of net debt | | | | | | | | | | | | | | | | — | | Minority interests | | | | | | | | | | | | | | | | (4 | ) | Net income | | | | | | | | | | | | | | | | 663 | |
a 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) | Adjustments include special items, inventory valuation effect and, equity shareas from January 1st, 2011, the effect of adjustments and selected items related to Sanofi-Aventis.changes in fair value. |
| | | | | | | | | | | | | | (b) Of which inventory valuation effect | | Upstream | | Downstream | | Chemicals | | Corporate | | | | | | on operating income
| | — | | 1,816 | | 389 | | — | | | | | | on net operating income
| | — | | 1,285 | | 254 | | — | | | | | | (c) Of which equity share of adjustments and selected items related to Sanofi-Aventis
| | — | | — | | — | | (300 | ) | | | | |
| | | | | | | | | | | | | | | | | | | For the year ended December 31, 2009 (adjusted) (€ million) | | Upstream | | | Downstream | | | Chemicals | | | Corporate | | | Intercompany | | | Total | | Non-Group sales | | 16,072 | | | 100,518 | | | 14,726 | | | 11 | | | — | | | 131,327 | | Intersegment sales | | 15,958 | | | 3,786 | | | 735 | | | 156 | | | (20,635 | ) | | — | | Excise taxes | | — | | | (19,174 | ) | | — | | | — | | | — | | | (19,174 | ) | Revenues from sales | | 32,030 | | | 85,130 | | | 15,461 | | | 167 | | | (20,635 | ) | | 112,153 | | Operating expenses | | (14,735 | ) | | (82,839 | ) | | (14,637 | ) | | (656 | ) | | 20,635 | | | (92,232 | ) | Depreciation, depletion and amortization of tangible assets and mineral interests | | (4,416 | ) | | (1,265 | ) | | (575 | ) | | (35 | ) | | — | | | (6,291 | ) | Adjusted operating income | | 12,879 | | | 1,026 | | | 249 | | | (524 | ) | | — | | | 13,630 | | Equity in income (loss) of affiliates and other items | | 1,006 | | | 147 | | | 65 | | | 814 | | | — | | | 2,032 | | Tax on net operating income | | (7,503 | ) | | (220 | ) | | (42 | ) | | 329 | | | — | | | (7,436 | ) | Adjusted net operating income | | 6,382 | | | 953 | | | 272 | | | 619 | | | — | | | 8,226 | | Net cost of net debt | | | | | | | | | | | | | | | | | (264 | ) | Minority interests | | | | | | | | | | | | | | | | | (178 | ) | Adjusted net income | | | | | | | | | | | | | | | | | 7,784 | |
| | | | | | | | | | | | | | | | | | For the year ended December 31, 2009 (€ million) | | 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 | ) | 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% | |
| | | | | | | | | | | | | | | | | | | For the year ended December 31, 2008 (€ million) | | Upstream | | | Downstream | | | Chemicals | | | Corporate | | | Intercompany | | | Total | | Non-Group sales | | 24,256 | | | 135,524 | | | 20,150 | | | 46 | | | — | | | 179,976 | | Intersegment sales | | 25,132 | | | 5,574 | | | 1,252 | | | 120 | | | (32,078 | ) | | — | | Excise taxes | | — | | | (19,645 | ) | | — | | | — | | | — | | | (19,645 | ) | Revenues from sales | | 49,388 | | | 121,453 | | | 21,402 | | | 166 | | | (32,078 | ) | | 160,331 | | Operating expenses | | (21,915 | ) | | (119,425 | ) | | (20,942 | ) | | (685 | ) | | 32,078 | | | (130,889 | ) | Depreciation, depletion and amortization of tangible assets and mineral interests | | (4,005 | ) | | (1,202 | ) | | (518 | ) | | (30 | ) | | — | | | (5,755 | ) | Operating income | | 23,468 | | | 826 | | | (58 | ) | | (549 | ) | | — | | | 23,687 | | Equity in income (loss) of affiliates and other items | | 1,541 | | | (158 | ) | | (34 | ) | | 590 | | | — | | | 1,939 | | Tax on net operating income | | (14,563 | ) | | (143 | ) | | 76 | | | 315 | | | — | | | (14,315 | ) | Net operating income | | 10,446 | | | 525 | | | (16 | ) | | 356 | | | — | | | 11,311 | | Net cost of net debt | | | | | | | | | | | | | | | | | (358 | ) | Minority interests | | | | | | | | | | | | | | | | | (363 | ) | Net income | | | | | | | | | | | | | | | | | 10,590 | |
| | | | | | | | | | | | | | | | | | For the year ended December 31, 2008 (adjustments(a)) (€ million) | | Upstream | | | Downstream | | | Chemicals | | | Corporate | | | Intercompany | | Total | | Non-Group sales | | | | | | | | | | | | | | | | | | Intersegment sales | | | | | | | | | | | | | | | | | | Excise taxes | | | | | | | | | | | | | | | | | | Revenues from sales | | | | | | | | | | | | | | | | | | Operating expenses | | — | | | (2,776 | ) | | (925 | ) | | — | | | | | (3,701 | ) | Depreciation, depletion and amortization of tangible assets and mineral interest | | (171 | ) | | — | | | (6 | ) | | — | | | | | (177 | ) | Operating income(b) | | (171 | ) | | (2,776 | ) | | (931 | ) | | — | | | | | (3,878 | ) | Equity in income (loss) of affiliates and other items(c) | | (164 | ) | | (195 | ) | | (82 | ) | | (345 | ) | | | | (786 | ) | Tax on net operating income | | 57 | | | 927 | | | 329 | | | (2 | ) | | | | 1,311 | | Net operating income(b) | | (278 | ) | | (2,044 | ) | | (684 | ) | | (347 | ) | | | | (3,353 | ) | Net cost of net debt | | | | | | | | | | | | | | | | — | | Minority interests | | | | | | | | | | | | | | | | 23 | | Net income | | | | | | | | | | | | | | | | (3,330 | ) |
(a) | Adjustments include special items, inventory valuation effect and equity share of adjustments related to Sanofi-Aventis. |
| | | | | | | | | | | | | | | | (b) Of which inventory valuation effect | | | Upstream | | | | Downstream | | | | Chemicals | | | | Corporate | | | | | | on operating income | | | — | | | | 1,224 | | | | (2,7769 | ) | | (727 | ) | | — | | | | | | on net operating income | | — | | (1,971 | )— | | | (504 | )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 | | | Upstream | | | | Downstream | | | | Chemicals | | | | Corporate | | | | | | on operating income | | | — | | | | 863 | | | | 130 | | | | — | | | | | | on net operating income | | | — | | | | 640 | | | | 113 | | | | — | | | | | | (c) Of which equity share of adjustments related to Sanofi-AventisSanofi | | — | | — | | | | — | | | | — | | | | (39381 | ) | | | | |
| | | | | | | | | | | | | | | | | | | For the year ended December 31, 2008 (adjusted) (€ million) | | Upstream | | | Downstream | | | Chemicals | | | Corporate | | | Intercompany | | | Total | | Non-Group sales | | 24,256 | | | 135,524 | | | 20,150 | | | 46 | | | — | | | 179,976 | | Intersegment sales | | 25,132 | | | 5,574 | | | 1,252 | | | 120 | | | (32,078 | ) | | — | | Excise taxes | | — | | | (19,645 | ) | | — | | | — | | | — | | | (19,645 | ) | Revenues from sales | | 49,388 | | | 121,453 | | | 21,402 | | | 166 | | | (32,078 | ) | | 160,331 | | Operating expenses | | (21,915 | ) | | (116,649 | ) | | (20,017 | ) | | (685 | ) | | 32,078 | �� | | (127,188 | ) | Depreciation, depletion and amortization of tangible assets and mineral interests | | (3,834 | ) | | (1,202 | ) | | (512 | ) | | (30 | ) | | — | | | (5,578 | ) | Adjusted operating income | | 23,639 | | | 3,602 | | | 873 | | | (549 | ) | | — | | | 27,565 | | Equity in income (loss) of affiliates and other items | | 1,705 | | | 37 | | | 48 | | | 935 | | | — | | | 2,725 | | Tax on net operating income | | (14,620 | ) | | (1,070 | ) | | (253 | ) | | 317 | | | — | | | (15,626 | ) | Adjusted net operating income | | 10,724 | | | 2,569 | | | 668 | | | 703 | | | — | | | 14,664 | | Net cost of net debt | | | | | | | | | | | | | | | | | (358 | ) | Minority interests | | | | | | | | | | | | | | | | | (386 | ) | Adjusted net income | | | | | | | | | | | | | | | | | 13,920 | |
| | | | | | | | | | | | | | | | | | For the year ended December 31, 2008 (€ million) | | 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 | | 36% | | | 20% | | | 9% | | | | | | | | 26% | |
| | | | | | | | | | | | | | | | | | | For the year ended December 31, 2007 (€ million) | | 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 | | | | | | | | | | | | | | | | | 13,181 | |
| | | | | | | | | | | | | | | | | | For the year ended December 31, 2007 (adjustments(a)) (€ million) | | 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 | | | | | | | | | | | | | | | | 978 | | (a) Adjustments include special items, inventory valuation effect and equity share of adjustments related to Sanofi-Aventis. | | (b) Of which inventory valuation effect | | Upstream | | | Downstream | | | Chemicals | | | Corporate | | | | | | | on operating income | | — | | | 1,529 | | | 301 | | | — | | | | | | | on net operating income | | — | | | 1,098 | | | 201 | | | — | | | | | | | (c) Of which equity share of adjustments related to Sanofi-Aventis | | — | | | — | | | — | | | (318 | ) | | | | | |
| | | | | | | | | | | | | | | | | | | For the year ended December 31, 2007 (adjusted) (€ million) | | 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 | | | | | | | | | | | | | | | | | 12,203 | |
| | | | | | | | | | | | | | | | | | For the year ended December 31, 2007 (€ million) | | Upstream | | | Downstream | | | Chemicals | | | Corporate | | | Intercompany | | Total | | Total expenditures | | 8,882 | | | 1,875 | | | 911 | | | 54 | | | | | 11,722 | | Total divestments | | 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 | | 34% | | | 21% | | | 12% | | | | | | | | 24% | |
B) RECONCILIATION BETWEEN BUSINESS SEGMENT INFORMATION AND THE CONSOLIDATED STATEMENT OF INCOME
The table below presents the impact of adjustment items on the Consolidated Statement of Income:
| | | | | | | | | | For the year ended December 31, 2009 (€ million) | | 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 | | Minority interests | | 178 | | | 4 | | | 182 | |
| | | | | | | | | | | | | | | | | | | | | | | | | For the year ended December 31, 2010 (adjusted) (M€)(a) | | Upstream | | | Downstream | | | Chemicals | | | Corporate | | | Intercompany | | | Total | | Non-Group sales | | | 18,527 | | | | 123,245 | | | | 17,490 | | | | 7 | | | | — | | | | 159,269 | | Intersegment sales | | | 22,540 | | | | 4,693 | | | | 981 | | | | 186 | | | | (28,400 | ) | | | — | | Excise taxes | | | — | | | | (18,793 | ) | | | — | | | | — | | | | — | | | | (18,793 | ) | Revenues from sales | | | 41,067 | | | | 109,145 | | | | 18,471 | | | | 193 | | | | (28,400 | ) | | | 140,476 | | Operating expenses | | | (18,271 | ) | | | (106,583 | ) | | | (17,066 | ) | | | (665 | ) | | | 28,400 | | | | (114,185 | ) | Depreciation, depletion and amortization of tangible assets and mineral interests | | | (5,143 | ) | | | (1,311 | ) | | | (512 | ) | | | (39 | ) | | | — | | | | (7,005 | ) | Adjusted operating income | | | 17,653 | | | | 1,251 | | | | 893 | | | | (511 | ) | | | — | | | | 19,286 | | Equity in income (loss) of affiliates and other items | | | 1,350 | | | | 267 | | | | 231 | | | | 368 | | | | — | | | | 2,216 | | Tax on net operating income | | | (10,406 | ) | | | (350 | ) | | | (267 | ) | | | 269 | | | | — | | | | (10,754 | ) | Adjusted net operating income | | | 8,597 | | | | 1,168 | | | | 857 | | | | 126 | | | | — | | | | 10,748 | | Net cost of net debt | | | | | | | | | | | | | | | | | | | | | | | (226 | ) | Non-controlling interests | | | | | | | | | | | | | | | | | | | | | | | (234 | ) | Adjusted net income | | | | | | | | | | | | | | | | | | | | | | | 10,288 | | Adjusted fully-diluted earnings per share (€) | | | | | | | | | | | | | | | | | | | | 4.58 | |
(a) | Adjustments include special items, inventory valuation effect and equityExcept for earnings per share of adjustments and selected items related to Sanofi-Aventis. |
| | | | | | | | | | | | | | | | | | | | | | | 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, 2008 (€ million) | | 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 | ) | 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, 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 adjustments related to Sanofi-Aventis.Sanofi. |
| | | | | | | | | | | | | | | | | | | | | (b) Of which inventory valuation effect | | | Upstream | | | | Downstream | | | | Chemicals | | | | Corporate | | | | | | on operating income | | | — | | | | 1,816 | | | | 389 | | | | — | | | | | | on net operating income | | | — | | | | 1,285 | | | | 254 | | | | — | | | | | | (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, 2007 (€ million) | | Adjusted | | | Adjustments(a) | | | Consolidated statement of income | | Sales | | 158,752 | | | — | | | 158,752 | | Excise taxes | | (21,928 | ) | | — | | | (21,928 | ) | Revenues from sales | | 136,824 | | | — | | | 136,824 | | Purchases, net of inventory variation | | (89,688 | ) | | 1,881 | | | (87,807 | ) | Other operating expenses | | (17,375 | ) | | (39 | ) | | (17,414 | ) | Exploration costs | | (877 | ) | | — | | | (877 | ) | Depreciation, depletion and amortization of tangible assets and mineral interests | | (5,378 | ) | | (47 | ) | | (5,425 | ) | Other income | | 384 | | | 290 | | | 674 | | Other expense | | (225 | ) | | (245 | ) | | (470 | ) | Financial interest on debt | | (1,783 | ) | | — | | | (1,783 | ) | Financial income from marketable securities & cash equivalents | | 1,244 | | | — | | | 1,244 | | Cost of net debt | | (539 | ) | | — | | | (539 | ) | Other financial income | | 643 | | | — | | | 643 | | Other financial expense | | (274 | ) | | — | | | (274 | ) | Equity in income (loss) of affiliates | | 2,079 | | | (304 | ) | | 1,775 | | Income taxes | | (13,031 | ) | | (544 | ) | | (13,575 | ) | Consolidated net income | | 12,543 | | | 992 | | | 13,535 | | Group share | | 12,203 | | | 978 | | | 13,181 | | Minority interests | | 340 | | | 14 | | | 354 | |
| | | | | | | | | | | | | | | | | | | | | | | For the year ended December 31, 2009 (M€) | | Upstream | | | Downstream | | | Chemicals | | | Corporate | | | Intercompany | | Total | | Total expenditures | | | 9,855 | | | | 2,771 | | | | 631 | | | | 92 | | | | | | 13,349 | | Total divestments | | | 398 | | | | 133 | | | | 47 | | | | 2,503 | | | | | | 3,081 | | Cash flow from operating activities | | | 10,200 | | | | 1,164 | | | | 1,082 | | | | (86 | ) | | | | | 12,360 | | Balance sheet as of December 31, 2009 | | | | | | | | | | | | | | | | | | | | | | | Property, plant and equipment, intangible assets, net | | | 43,997 | | | | 9,588 | | | | 5,248 | | | | 271 | | | | | | 59,104 | | Investments in equity affiliates | | | 4,260 | | | | 2,110 | | | | 652 | | | | 4,235 | | | | | | 11,257 | | Loans to equity affiliates and other non-current assets | | | 3,844 | | | | 1,369 | | | | 850 | | | | 547 | | | | | | 6,610 | | Working capital | | | 660 | | | | 7,624 | | | | 2,151 | | | | 58 | | | | | | 10,493 | | Provisions and other non-current liabilities | | | (15,364 | ) | | | (2,190 | ) | | | (1,721 | ) | | | (1,094 | ) | | | | | (20,369 | ) | Assets and liabilities classified as held for sale | | | — | | | | — | | | | — | | | | — | | | | | | — | | Capital Employed (balance sheet) | | | 37,397 | | | | 18,501 | | | | 7,180 | | | | 4,017 | | | | | | 67,095 | | Less inventory valuation effect | | | — | | | | (3,202 | ) | | | (282 | ) | | | 840 | | | | | | (2,644 | ) | Capital Employed (Business segment information) | | | 37,397 | | | | 15,299 | | | | 6,898 | | | | 4,857 | | | | | | 64,451 | | ROACE as a percentage | | | 18% | | | | 7% | | | | 4% | | | | | | | | | | 13% | |
The 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 effect of changes in fair value. |
| | | | | | | | | | | | | For the year ended December 31, 2010 (M€) | | Adjusted | | | Adjustments(a) | | | Consolidated statement of income | | Sales | | | 159,269 | | | | — | | | | 159,269 | | Excise taxes | | | (18,793 | ) | | | — | | | | (18,793 | ) | Revenues from sales | | | 140,476 | | | | — | | | | 140,476 | | Purchases, net of inventory variation | | | (94,286 | ) | | | 1,115 | | | | (93,171 | ) | Other operating expenses | | | (19,035 | ) | | | (100 | ) | | | (19,135 | ) | Exploration costs | | | (864 | ) | | | — | | | | (864 | ) | Depreciation, depletion and amortization of tangible assets and mineral interests | | | (7,005 | ) | | | (1,416 | ) | | | (8,421 | ) | Other income | | | 524 | | | | 872 | | | | 1,396 | | Other expense | | | (346 | ) | | | (554 | ) | | | (900 | ) | Financial interest on debt | | | (465 | ) | | | — | | | | (465 | ) | Financial income from marketable securities & cash equivalents | | | 131 | | | | — | | | | 131 | | Cost of net debt | | | (334 | ) | | | — | | | | (334 | ) | Other financial income | | | 442 | | | | — | | | | 442 | | Other financial expense | | | (407 | ) | | | — | | | | (407 | ) | Equity in income (loss) of affiliates | | | 2,003 | | | | (50 | ) | | | 1,953 | | Income taxes | | | (10,646 | ) | | | 418 | | | | (10,228 | ) | Consolidated net income | | | 10,522 | | | | 285 | | | | 10,807 | | Group share | | | 10,288 | | | | 283 | | | | 10,571 | | Non-controlling interests | | | 234 | | | | 2 | | | | 236 | |
(a) | 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 adjustments related to Sanofi-Aventis.Sanofi. |
C) ADJUSTMENT ITEMS BY BUSINESS SEGMENT
D) | | 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, 2009(€ million) | | Upstream | | | Downstream | | | Chemicals | | | Corporate | | Total | | Inventory valuation effect | | — | | | 1,816 | | | 389 | | | — | | 2,205 | | Restructuring charges | | — | | | — | | | — | | | — | | — | | Asset impairment charges | | (4 | ) | | (347 | ) | | (40 | ) | | — | | (391 | ) | Other items | | (17 | ) | | (258 | ) | | (45 | ) | | — | | (320 | ) | Total | | (21 | ) | | 1,211 | | | 304 | | | — | | 1,494 | |
Adjustments to net income, Group share
| | | | | | | | | | | | | | | | | | | | | 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, 2009(€ million) | | Upstream | | | Downstream | | | Chemicals | | | Corporate | | | Total | | Inventory valuation effect | | — | | | 1,279 | | | 254 | | | — | | | 1,533 | | TOTAL’s equity share of adjustments and selected items related to Sanofi-Aventis | | — | | | — | | | — | | | (300 | ) | | (300 | ) | Restructuring charges | | — | | | (27 | ) | | (102 | ) | | — | | | (129 | ) | Asset impairment charges | | (52 | ) | | (253 | ) | | (28 | ) | | — | | | (333 | ) | Gains (losses) on disposals of assets | | — | | | — | | | — | | | 179 | | | 179 | | Other items | | (112 | ) | | (182 | ) | | 7 | | | — | | | (287 | ) | Total | | (164 | ) | | 817 | | | 131 | | | (121 | ) | | 663 | |
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, 2008(€ million) | | Upstream | | | Downstream | | | Chemicals | | | Corporate | | Total | | Inventory valuation effect | | — | | | (2,776 | ) | | (727 | ) | | — | | (3,503 | ) | Restructuring charges | | — | | | — | | | — | | | — | | — | | Asset impairment charges | | (171 | ) | | — | | | (6 | ) | | — | | (177 | ) | Other items | | — | | | — | | | (198 | ) | | — | | (198 | ) | Total | | (171 | ) | | (2,776 | ) | | (931 | ) | | — | | (3,878 | ) |
Adjustments to net income, Group share
| | | | | | | | | | | | | | | | For the year ended December 31, 2008(€ million) | | Upstream | | | Downstream | | | Chemicals | | | Corporate | | | Total | | Inventory valuation effect | | — | | | (1,949 | ) | | (503 | ) | | — | | | (2,452 | ) | TOTAL’s equity share of adjustments related to Sanofi-Aventis | | — | | | — | | | — | | | (393 | ) | | (393 | ) | Restructuring charges | | — | | | (47 | ) | | (22 | ) | | — | | | (69 | ) | Asset impairment charges | | (172 | ) | | (26 | ) | | (7 | ) | | — | | | (205 | ) | Gains (losses) on disposals of assets | | 130 | | | — | | | — | | | 84 | | | 214 | | Other items | | (236 | ) | | — | | | (151 | ) | | (38 | ) | | (425 | ) | Total | | (278 | ) | | (2,022 | ) | | (683 | ) | | (347 | ) | | (3,330 | ) |
Adjustments to operating income
| | | | | | | | | | | | | | | For the year ended December 31, 2007(€ million) | | 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, Group share
| For the year ended December 31, 2007(€ million) | | 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 | | — | | | 1,084 | | | 201 | | | — | | | 1,285 | | | | — | | | | 1,816 | | | | 389 | | | | — | | | | 2,205 | | TOTAL’s equity share of special items recorded by Sanofi-Aventis | | — | | | — | | | — | | | 75 | | | 75 | | | TOTAL’s equity share of adjustments related to Sanofi-Aventis | | — | | | — | | | — | | | (318 | ) | | (318 | ) | | 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 | | — | | | (20 | ) | | (15 | ) | | — | | | (35 | ) | | | — | | | | (27 | ) | | | (102 | ) | | | — | | | | (129 | ) | Asset impairment charges | | (93 | ) | | (61 | ) | | (8 | ) | | — | | | (162 | ) | | | (52 | ) | | | (253 | ) | | | (28 | ) | | | — | | | | (333 | ) | Gains (losses) on disposals of assets | | 89 | | | 101 | | | — | | | 116 | | | 306 | | | | — | | | | — | | | | — | | | | 179 | | | | 179 | | Other items | | (8 | ) | | (27 | ) | | (38 | ) | | (100 | ) | | (173 | ) | | | (112 | ) | | | (182 | ) | | | 7 | | | | — | | | | (287 | ) | Total | | (12 | ) | | 1,077 | | | 140 | | | (227 | ) | | 978 | | | | (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, 2009,2011, with an impact of€413781 million in operating income and€3821,014 million in net income, Group share. These impairments have been disclosed as adjustments to operating income for€391 million and as adjustments to net income, Group share for€333 million.share. These items are identified in paragraph 4C4D above as adjustment items with the heading “Asset impairment charges”. The impairment losses impact certain Cash Generating Units (CGU) for which there were indications of impairment, due mainly to changes in the operating conditions or the economic environment of their specific businesses. The principles applied are the following: the recoverable amount of CGUs has been based on their value in use, as defined in Note 1 paragraph L to the Consolidated Financial Statements “Impairment of long-lived assets”; future cash flows have been determined with the assumptions in the long-term plan of the Group. These assumptions (including future prices of products, supply and demand for products, future production volumes) represent the best estimate by management of the Group of all economic conditions during the remaining life of assets; future cash flows, are based on the long-term plan, and 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 andassets. 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 ending in 2007, 20082009, 2010 and 2009.2011.
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 DowstreamDownstream 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. The year 2009 was marked byFor the deteriorationrefining 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 economic environment, and especially by the declinediscount rate would have a positive impact of€335 million in refining margins that have resulted in changes in the operating conditions of assets in some business units of the Downstream segment. These factors have triggered the recognition of impairments of assets impacting the operating income forand€347 millions and the219 million in net income, forGroup share. Inverse variations of projections of gross margin and discount rate would have impacts of respectively €253 million. Given the deteriorated economic environment, sensitivity analysis using a lower refining margin have been performed by the(683) million and€(249) million in operating income and€(448) million and€(164) million in net income, Group and have not led to additional impairment.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, 2008,2010, impairments of assets have been recognized in the Upstream, Downstream and Chemicals segments with an impact of€2161,416 million in operating income and€2441,224 million in net income, Group share. These impairments have been disclosed as adjustments to operating income and adjustments to net income, Group share. For the year ended December 31, 2009, impairments of assets have been recognized in the Upstream, Downstream and Chemicals segments with an impact of€413 million in operating income and€382 million in net income, Group share. These impairments have been disclosed as adjustments to operating income for€177391 million and adjustments to net income, Group share for€205333 million. For the yearyears ended December 31, 2007, impairments of assets have been recognized in the Upstream, Downstream2011, 2010 and Chemicals segments with an impact of€47 million in operating income and€162 million in net income, Group share. For the year ended December 31, 2009, no reversal of impairment has been recognized. For the year ended December 31, 2008, reversals of impairment losses have been recognized in the Upstream segment with an impact of€41 million in operating income and€29 million in net income, Group share. No reversal of impairment losses has been recognized in 2007.
5)INFORMATION BY GEOGRAPHICAL AREA | (€ million) | | France | | Rest of Europe | | North America | | Africa | | Rest of world | | Total | | (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 | | | 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 | | | 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 | | | 1,189 | | | | 2,502 | | | | 1,739 | | | | 4,651 | | | | 3,268 | | | | 13,349 | | For the year ended December 31, 2008 | | | | | | | | | | | | | | Non-Group sales | | 43,616 | | 82,761 | | 14,002 | | 12,482 | | 27,115 | | 179,976 | | Property, plant and equipment, intangible assets, net | | 7,260 | | 13,485 | | 5,182 | | 15,460 | | 10,096 | | 51,483 | | Capital expenditures | | 1,997 | | 2,962 | | 1,255 | | 4,500 | | 2,926 | | 13,640 | | 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 | |
6)OPERATING EXPENSES | For the year ended December 31,(€ million) | | 2009 | | 2008 | | 2007 | | | For the year ended December 31, (M€) | | | 2011 | | 2010 | | 2009 | | Purchases, net of inventory variation(a) | | (71,058 | ) | | (111,024 | ) | | (87,807 | ) | | | (113,892 | )(b) | | | (93,171 | ) | | | (71,058 | ) | Exploration costs | | (698 | ) | | (764 | ) | | (877 | ) | | | (1,019 | ) | | | (864 | ) | | | (698 | ) | Other operating expenses(b)(c) | | (18,591 | ) | | (19,101 | ) | | (17,414 | ) | | | (19,843 | ) | | | (19,135 | ) | | | (18,591 | ) | of which non-current operating liabilities (allowances) reversals | | 515 | | | 459 | | | 781 | | | | 615 | | | | 387 | | | | 515 | | of which current operating liabilities (allowances) reversals | | (43 | ) | | (29 | ) | | (42 | ) | | | (150 | ) | | | (101 | ) | | | (43 | ) | Operating expenses | | (90,347 | ) | | (130,889 | ) | | (106,098 | ) | | | (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) OTHER INCOME AND OTHER EXPENSE
| | | | | | | | | | For the year ended December 31,(€ million) | | 2009 | | | 2008 | | | 2007 | | Gains (losses) on disposal of assets | | 200 | | | 257 | | | 639 | | Foreign exchange gains | | — | | | 112 | | | 35 | | Other | | 114 | | | — | | | — | | Other income | | 314 | | | 369 | | | 674 | | Foreign exchange losses | | (32 | ) | | — | | | — | | Amortization of other intangible assets (excl. mineral interests) | | (142 | ) | | (162 | ) | | (178 | ) | Other | | (426 | ) | | (392 | ) | | (292 | ) | Other expense | | (600 | ) | | (554 | ) | | (470 | ) |
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 In 2009,2011, gains and losses on disposal of assets are mainly related to the disposalsale of sharesthe interest in CEPSA, to the sale of Sanofi-Aventis.assets in the Upstream segment (especially the sale of 10% Group’s interest in the Colombian pipeline OCENSA) and to the sale of photocure and coatings resins businesses. These disposals are described in Note 3 to the Consolidated Financial Statements. In 2008,2010, 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 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.Sanofi (see Note 3 to the Consolidated Financial Statements). In 2007,2009, gains and losses on disposal of assets were mainly related to sales of non-current assets in the Upstream and Downstream segments, as well as the disposal of shares of Sanofi-Aventis.Sanofi. Other expense In 2011, the heading “Other” is mainly comprised of€243 million of restructuring charges in the Upstream, Downstream and Chemicals segments. In 2010, the heading “Other” was mainly comprised of€248 million of restructuring charges in the Downstream and Chemicals segments. In 2009, the heading “Other” iswas mainly comprised of€190 million of restructuring charges in the Downstream and Chemicals segments. 8) | | OTHER FINANCIAL INCOME AND EXPENSE |
In 2008, the heading “Other” was mainly comprised of:
| | | | | | | | | | | | | 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 | ) |
€107 million of restructuring charges in the Upstream, Downstream and Chemicals segments; and
€48 million of changes in provisions related to various antitrust investigations as described in Note 32 to the Consolidated Financial Statements “Other risks and contingent liabilities”.
In 2007, the heading “Other” was mainly comprised of:
€51 million of restructuring charges in the Downstream and Chemicals segments; and
€100 million of changes in provisions related to various antitrust investigations as described in Note 32 to the Consolidated Financial Statements “Other risks and contingent liabilities”.
8) OTHER FINANCIAL INCOME AND EXPENSE
| | | | | | | | | | As of December 31,(€ million) | | 2009 | | | 2008 | | | 2007 | | Dividend income on non-consolidated subsidiaries | | 210 | | | 238 | | | 218 | | Capitalized financial expenses | | 117 | | | 271 | | | 322 | | Other | | 316 | | | 219 | | | 103 | | Other financial income | | 643 | | | 728 | | | 643 | | | | | | Accretion of asset retirement obligations | | (283 | ) | | (229 | ) | | (189 | ) | Other | | (62 | ) | | (96 | ) | | (85 | ) | Other financial expense | | (345 | ) | | (325 | ) | | (274 | ) |
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 common tax regime as from 2011. The exit of the consolidated income tax treatment covershas no significant impact, neither on the period 2008-2010.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 €22,29227,444 million as of December 31, 2009.2011. 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€17,96822,585 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, (€ million) | | 2009 | | 2008 | | 2007 | | | For the year ended December 31, (M€) | | | 2011 | | 2010 | | 2009 | | Current income taxes | | (7,213 | ) | | (14,117 | ) | | (12,141 | ) | | | (12,495 | ) | | | (9,934 | ) | | | (7,213 | ) | Deferred income taxes | | (538 | ) | | (29 | ) | | (1,434 | ) | | | (1,578 | ) | | | (294 | ) | | | (538 | ) | Total income taxes | | (7,751 | ) | | (14,146 | ) | | (13,575 | ) | | | (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, 2009, 2008 and 2007 are as follows: | As of December 31, (€ million) | | 2009 | | 2008 | | 2007 | | | As of December 31, (M€) | | | 2011 | | 2010 | | 2009 | | Net operating losses and tax carry forwards | | 1,114 | | | 1,031 | | | 560 | | | | 1,584 | | | | 1,145 | | | | 1,114 | | Employee benefits | | 517 | | | 519 | | | 760 | | | | 621 | | | | 535 | | | | 517 | | Other temporary non-deductible provisions | | 2,184 | | | 2,075 | | | 2,341 | | | | 3,521 | | | | 2,757 | | | | 2,184 | | Gross deferred tax assets | | 3,815 | | | 3,625 | | | 3,661 | | | | 5,726 | | | | 4,437 | | | | 3,815 | | Valuation allowance | | (484 | ) | | (475 | ) | | (449 | ) | | | (667 | ) | | | (576 | ) | | | (484 | ) | Net deferred tax assets | | 3,331 | | | 3,150 | | | 3,212 | | | | 5,059 | | | | 3,861 | | | | 3,331 | | Excess tax over book depreciation | | (9,791 | ) | | (8,836 | ) | | (9,254 | ) | | | (12,831 | ) | | | (10,966 | ) | | | (9,791 | ) | Other temporary tax deductions | | (1,179 | ) | | (1,171 | ) | | (1,209 | ) | | | (2,721 | ) | | | (1,339 | ) | | | (1,179 | ) | Gross deferred tax liability | | (10,970 | ) | | (10,007 | ) | | (10,463 | ) | | | (15,552 | ) | | | (12,305 | ) | | | (10,970 | ) | Net deferred tax liability | | (7,639 | ) | | (6,857 | ) | | (7,251 | ) | | | (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, (€ million) | | | 2009 | | 2008 | | 2007 | | | Deferred tax assets, non-current | | (note 14 | ) | | 1,164 | | | 1,010 | | | 797 | | | Deferred tax assets, current | | (note 16 | ) | | 214 | | | 206 | | | 112 | | | As of December 31, (M€) | | | 2011 | | 2010 | | 2009 | | Deferred tax assets, non-current(note 14) | | | | 1,767 | | | | 1,378 | | | | 1,164 | | Deferred tax assets, current(note 16) | | | | — | | | | 151 | | | | 214 | | Deferred tax liabilities, non-current | | | | (8,948 | ) | | (7,973 | ) | | (7,933 | ) | | | (12,260 | ) | | | (9,947 | ) | | | (8,948 | ) | Deferred tax liabilities, current | | | | (69 | ) | | (100 | ) | | (227 | ) | | | — | | | | (26 | ) | | | (69 | ) | Net amount | | | (7,639 | ) | | (6,857 | ) | | (7,251 | ) | | | (10,493 | ) | | | (8,444 | ) | | | (7,639 | ) |
The net deferred tax variation in the balance sheet is analyzed as follows: | As of December 31, (€ million) | | 2009 | | 2008 | | 2007 | | | As of December 31, (M€) | | | 2011 | | 2010 | | 2009 | | Opening balance | | (6,857 | ) | | (7,251 | ) | | (6,369 | ) | | | (8,444 | ) | | | (7,639 | ) | | | (6,857 | ) | Deferred tax on income | | (538 | ) | | (29 | ) | | (1,434 | ) | | | (1,578 | ) | | | (294 | ) | | | (538 | ) | Deferred tax on shareholders’ equity(a) | | (38 | ) | | 30 | | | (6 | ) | | | (55 | ) | | | 28 | | | | (38 | ) | Changes in scope of consolidation | | (1 | ) | | (1 | ) | | 158 | | | | (17 | ) | | | (59 | ) | | | (1 | ) | Currency translation adjustment | | (205 | ) | | 394 | | | 400 | | | | (399 | ) | | | (480 | ) | | | (205 | ) | Closing balance | | (7,639 | ) | | (6,857 | ) | | (7,251 | ) | | | (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 as well as deferred taxes related to the cash flow hedge (see Note 17 to the Consolidated Financial Statements). |
Reconciliation between provision for income taxes and pre-tax income: | | | | | | | | | | For the year ended December 31,(€ million) | | 2009 | | | 2008 | | | 2007 | | Consolidated net income | | 8,629 | | | 10,953 | | | 13,535 | | Provision for income taxes | | 7,751 | | | 14,146 | | | 13,575 | | Pre-tax income | | 16,380 | | | 25,099 | | | 27,110 | | French statutory tax rate | | 34.43% | | | 34.43% | | | 34.43% | | Theoretical tax charge | | (5,640 | ) | | (8,642 | ) | | (9,334 | ) | Difference between French and foreign income tax rates | | (3,214 | ) | | (6,326 | ) | | (5,118 | ) | Tax effect of equity in income (loss) of affiliates | | 565 | | | 593 | | | 611 | | Permanent differences | | 597 | | | 315 | | | 122 | | Adjustments on prior years income taxes | | (47 | ) | | 12 | | | 75 | | Adjustments on deferred tax related to changes in tax rates | | (1 | ) | | (31 | ) | | (16 | ) | Changes in valuation allowance of deferred tax assets | | (6 | ) | | (63 | ) | | 80 | | Other | | (5 | ) | | (4 | ) | | 5 | | Net provision for income taxes | | (7,751 | ) | | (14,146 | ) | | (13,575 | ) |
| | | | | | | | | | | | | 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 2009 (identical to 20082010 and 2007)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,(€ million) | | 2009 | | 2008 | | 2007 | | | Basis | | Tax | | Basis | | Tax | | Basis | | Tax | 2008 | | — | | — | | — | | — | | 290 | | 141 | 2009 | | — | | — | | 233 | | 115 | | 222 | | 109 | 2010 | | 258 | | 126 | | 167 | | 79 | | 129 | | 59 | 2011 | | 170 | | 83 | | 93 | | 42 | | 33 | | 13 | 2012(a) | | 121 | | 52 | | 61 | | 19 | | 68 | | 22 | 2013(b) | | 133 | | 43 | | 1,765 | | 587 | | | | | 2014 and after | | 1,804 | | 599 | | — | | — | | — | | — | Unlimited | | 661 | | 211 | | 560 | | 189 | | 641 | | 216 | Total | | 3,147 | | 1,114 | | 2,879 | | 1,031 | | 1,383 | | 560 |
| | | | | | | | | | | | | | | | | | | | | | | | | | | 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 20122014 and after for 20072009. |
(b) | Net operating losses and tax credit carryforwards in 20132015 and after for 20082010. |
10)INTANGIBLE ASSETS | | | | | | | | As of December 31, 2009(€ million) | | 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 |
| As of December 31, 2008(€ million) | | Cost | | Amortization and impairment | | Net | | As of December 31, 2011 (M€) | | | Cost | | | Amortization and impairment | | Net | | Goodwill | | 1,690 | | (616 | ) | | 1,074 | | | 1,903 | | | | (993 | ) | | | 910 | | Proved and unproved mineral interests | | 6,010 | | (2,268 | ) | | 3,742 | | | 13,719 | | | | (3,181 | ) | | | 10,538 | | Other intangible assets | | 2,519 | | (1,994 | ) | | 525 | | | 3,377 | | | | (2,412 | ) | | | 965 | | Total intangible assets | | 10,219 | | (4,878 | ) | | 5,341 | | 18,999 | | | (6,586) | | 12,413 | |
| As of December 31, 2007(€ million) | | Cost | | Amortization and impairment | | Net | | As of December 31, 2010 (M€) | | | Cost | | | Amortization and impairment | | Net | | Goodwill | | 1,684 | | (617 | ) | | 1,067 | | | 1,498 | | | | (596 | ) | | | 902 | | Proved and unproved mineral interests | | 5,327 | | (2,310 | ) | | 3,017 | | | 10,099 | | | | (2,712 | ) | | | 7,387 | | Other intangible assets | | 2,452 | | (1,886 | ) | | 566 | | | 2,803 | | | | (2,175 | ) | | | 628 | | Total intangible assets | | 9,463 | | (4,813 | ) | | 4,650 | | | 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: | | | | | | | | | | | | | | | | | | (€ million) | | Net amount as of January 1, | | Acquisitions | | Disposals | | | Amortization and impairment | | | Currency translation adjustment | | | Other | | Net amount as of December 31, | 2009 | | 5,341 | | 629 | | (64 | ) | | (345 | ) | | 2 | | | 1,951 | | 7,514 | 2008 | | 4,650 | | 404 | | (3 | ) | | (259 | ) | | (93 | ) | | 642 | | 5,341 | 2007 | | 4,705 | | 472 | | (160 | ) | | (274 | ) | | (208 | ) | | 115 | | 4,650 |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | (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 2011, the heading “Other” mainly includes Chesapeake’s Barnett shale mineral interests reclassified into the acquisitions for€(649) million, the not yet paid part of the acquisition of Chesapeake’s mineral interests in Utica for€1,216 million, the reclassification of Joslyn’s mineral interests sold in 2011 and formerly classified in accordance with IFRS 5 “Non-current assets held for sale and discontinued operations” for€384 million, and€697 million related to the acquisition of SunPower. In 2010, the heading “Other” mainly included Chesapeake’s Barnett shale mineral interests reclassified into the acquisitions for€(975) million and the reclassification of Joslyn’s mineral interests in accordance with IFRS 5 “Non-current assets held for sale and discontinued operations” for€(390) 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 includesincluded Chesapeake’s Barnett shale mineral interests for€1,449 million (see Note 3 to the Consolidated Financial Statements). In 2008, the heading “Other” mainly included the impact of “proved and unproved mineral interests” from Synenco Energy Inc. for€221 million and from Goal Petroleum B.V. for€292 million.
A summary of changes in the carrying amount of goodwill by business segment for the year ended December 31, 20092011 is as follows: | (€ million) | | Net goodwill as of January 1, 2009 | | Increases | | Impairments | | Other | | Net goodwill as of December 31, 2009 | | (M€) | | | 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 | | 130 | | 70 | | — | | 2 | | 202 | | | 82 | | | | — | | | | (1 | ) | | | (12 | ) | | | 69 | | Chemicals | | 841 | | 11 | | — | | 5 | | 857 | | | 717 | | | | 23 | | | | (4 | ) | | | (9 | ) | | | 727 | | Corporate | | 25 | | — | | — | | — | | 25 | | | 25 | | | | — | | | | — | | | | — | | | | 25 | | Total | | 1,074 | | 81 | | — | | 7 | | 1,162 | | | 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, 2009(€ million) | | Cost | | Depreciation and impairment | | Net | | As of December 31, 2011 (M€) | | | Cost | | | Depreciation and impairment | | Net | | Upstream properties | | | | | | | | | | | | | Proved properties | | 71,082 | | (44,718 | ) | | 26,364 | | | 84,222 | | | | (54,589 | ) | | | 29,633 | | Unproved properties | | 182 | | (1 | ) | | 181 | | | 209 | | | | — | | | | 209 | | Work in progress | | 10,351 | | (51 | ) | | 10,300 | | | 21,190 | | | | (15 | ) | | | 21,175 | | Subtotal | | 81,615 | | (44,770 | ) | | 36,845 | | | 105,621 | | | | (54,604 | ) | | | 51,017 | | Other property, plant and equipment | | | | | | | | | | | | | Land | | 1,458 | | (435 | ) | | 1,023 | | | 1,346 | | | | (398 | ) | | | 948 | | Machinery, plant and equipment (including transportation equipment) | | 22,927 | | (15,900 | ) | | 7,027 | | | 25,838 | | | | (18,349 | ) | | | 7,489 | | Buildings | | 6,142 | | (3,707 | ) | | 2,435 | | | 6,241 | | | | (4,131 | ) | | | 2,110 | | Work in progress | | 2,774 | | (155 | ) | | 2,619 | | | 1,534 | | | | (306 | ) | | | 1,228 | | Other | | 6,506 | | (4,865 | ) | | 1,641 | | | 6,564 | | | | (4,899 | ) | | | 1,665 | | Subtotal | | 39,807 | | (25,062 | ) | | 14,745 | | | 41,523 | | | | (28,083 | ) | | | 13,440 | | Total property, plant and equipment | | 121,422 | | (69,832 | ) | | 51,590 | | | 147,144 | | | | (82,687 | ) | | | 64,457 | |
| | | | | | | | As of December 31, 2008(€ million) | | Cost | | Depreciation and impairment | | | Net | Upstream properties | | | | | | | | Proved properties | | 61,727 | | (39,315 | ) | | 22,412 | Unproved properties | | 106 | | (1 | ) | | 105 | Work in progress | | 9,586 | | — | | | 9,586 | Subtotal | | 71,419 | | (39,316 | ) | | 32,103 | Other property, plant and equipment | | | | | | | | Land | | 1,446 | | (429 | ) | | 1,017 | Machinery, plant and equipment (including transportation equipment) | | 21,734 | | (14,857 | ) | | 6,877 | Buildings | | 5,739 | | (3,441 | ) | | 2,298 | Work in progress | | 2,226 | | (10 | ) | | 2,216 | Other | | 6,258 | | (4,627 | ) | | 1,631 | Subtotal | | 37,403 | | (23,364 | ) | | 14,039 | Total property, plant and equipment | | 108,822 | | (62,680 | ) | | 46,142 |
| As of December 31, 2007(€ million) | | Cost | | Depreciation and impairment | | Net | | As of December 31, 2010 (M€) | | | Cost | | | Depreciation and impairment | | Net | | Upstream properties | | | | | | | | | | | | | Proved properties | | 60,124 | | (38,735 | ) | | 21,389 | | | 77,183 | | | | (50,582 | ) | | | 26,601 | | Unproved properties | | 48 | | (1 | ) | | 47 | | | 347 | | | | (1 | ) | | | 346 | | Work in progress | | 7,010 | | — | | | 7,010 | | | 14,712 | | | | (37 | ) | | | 14,675 | | Subtotal | | 67,182 | | (38,736 | ) | | 28,446 | | | 92,242 | | | | (50,620 | ) | | | 41,622 | | Other property, plant and equipment | | | | | | | | | | | | | Land | | 1,460 | | (417 | ) | | 1,043 | | | 1,304 | | | | (393 | ) | | | 911 | | Machinery, plant and equipment (including transportation equipment) | | 20,575 | | (14,117 | ) | | 6,458 | | | 23,831 | | | | (17,010 | ) | | | 6,821 | | Buildings | | 5,505 | | (3,430 | ) | | 2,075 | | | 6,029 | | | | (3,758 | ) | | | 2,271 | | Work in progress | | 1,832 | | (4 | ) | | 1,828 | | | 2,350 | | | | (488 | ) | | | 1,862 | | Other | | 6,291 | | (4,674 | ) | | 1,617 | | | 6,164 | | | | (4,687 | ) | | | 1,477 | | Subtotal | | 35,663 | | (22,642 | ) | | 13,021 | | | 39,678 | | | | (26,336 | ) | | | 13,342 | | Total property, plant and equipment | | 102,845 | | (61,378 | ) | | 41,467 | | | 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: | | | | | | | | | | | | | | | | | | | (€ million) | | Net amount as of January 1, | | Acquisitions | | Disposals | | | Depreciation and impairment | | | Currency translation adjustment | | | Other | | | Net amount as of December 31, | 2009 | | 46,142 | | 11,212 | | (65 | ) | | (6,765 | ) | | 397 | | | 669 | | | 51,590 | 2008 | | 41,467 | | 11,442 | | (102 | ) | | (5,941 | ) | | (1,151 | ) | | 427 | | | 46,142 | 2007 | | 40,576 | | 10,241 | | (729 | ) | | (5,674 | ) | | (2,347 | ) | | (600 | ) | | 41,467 |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | (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 2011, the heading “Disposals” mainly includes the impact of sales of assets in the Upstream segment (disposal of the interests in Gassled in Norway and in Joslyn’s field in Canada) and in the Downstream segment (disposal of Marketing assets in the United Kingdom) (see Note 3 to the Consolidated Financial Statements). In 2011, the heading “Depreciation and impairment” includes the impact of impairments of assets recognized for€781 million (see Note 4D to the Consolidated Financial Statements). In 2011, the heading “Other” corresponds to the increase of the asset for sites restitution for an amount of€653 million. It also includes€428 million related to the reclassification of tangible assets of Joslyn and resins businesses sold in 2011 and formerly classified in accordance with IFRS 5 “Non-current assets held for sale and discontinued operations”. In 2010, the heading “Disposals” mainly included the impact of sales of assets in the Upstream segment (sale of the interests in the Valhall and Hod fields in Norway and sale of the interest in Block 31 in Angola, see Note 3 to the Consolidated Financial Statements). In 2010, the heading “Depreciation and impairment” 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 includesincluded changes in net property, plant and equipment related to asset retirement obligations and Chesapeake’s Barnett shale tangible assets for€113 million (see Note 3 to the Consolidated Financial Statements). In 2008, the heading “Other” mainly included changes in net property, plant and equipment related to asset retirement obligations.
In 2007, the heading “Disposals” mainly included the impact of conversion of the Sincor project and the disposal of the Group’s interest in the Milford Haven refinery. The heading “Other” mainly included the impact of conversion of the Sincor project and changes in net property, plant and equipment related to asset retirement obligations.
Property, plant and equipment presented above include the following amounts for facilities and equipment under finance leases that have been capitalized: | | | | | | | | As of December 31, 2009(€ million) | | Cost | | Depreciation and impairment | | | Net | Machinery, plant and equipment | | 548 | | (343 | ) | | 205 | Buildings | | 60 | | (30 | ) | | 30 | Other | | — | | — | | | — | Total | | 608 | | (373 | ) | | 235 |
| | | | | | | | As of December 31, 2008(€ million) | | 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(€ million) | | Cost | | Depreciation and impairment | | Net | | As of December 31, 2011 (M€) | | | Cost | | | Depreciation and impairment | | Net | | Machinery, plant and equipment | | 503 | | (265 | ) | | 238 | | | 414 | | | | (284 | ) | | | 130 | | Buildings | | 35 | | (29 | ) | | 6 | | | 54 | | | | (25 | ) | | | 29 | | Other | | — | | — | | | — | | | — | | | | — | | | | — | | Total | | 538 | | (294 | ) | | 244 | | | 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 | Equity value(€ million) | | As of December 31, | | | | 2009 | | 2008 | | 2007 | | 2009 | | 2008 | | 2007 | | | | | | | | | | | | | | | | % owned | | | | equity value | | | | As of December 31, | | Equity value (M€) | | | 2011 | | 2010 | | 2009 | | 2011 | | | 2010 | | | 2009 | | | | % owned | | equity value | | NLNG | | 15.00 | % | | 15.00 | % | | 15.00 | % | | 1,136 | | 1,135 | | 1,062 | | | 15.00 | % | | | 15.00 | % | | | 15.00 | % | | | 953 | | | | 1,108 | | | | 1,136 | | PetroCedeño — EM(a) | | 30.32 | % | | 30.32 | % | | 30.32 | % | | 874 | | 760 | | 534 | | | 30.32 | % | | | 30.32 | % | | | 30.32 | % | | | 1,233 | | | | 1,136 | | | | 874 | | CEPSA (Upstream share)(d) | | 48.83 | % | | 48.83 | % | | 48.83 | % | | 385 | | 403 | | 246 | | | — | | | | 48.83 | % | | | 48.83 | % | | | — | | | | 340 | | | | 385 | | Angola LNG Ltd.(a) | | 13.60 | % | | 13.60 | % | | 13.60 | % | | 490 | | 326 | | 155 | | | 13.60 | % | | | 13.60 | % | | | 13.60 | % | | | 869 | | | | 710 | | | | 490 | | Qatargas | | 10.00 | % | | 10.00 | % | | 10.00 | % | | 83 | | 251 | | 172 | | | 10.00 | % | | | 10.00 | % | | | 10.00 | % | | | 97 | | | | 85 | | | | 83 | | Société du Terminal Méthanier de Fos Cavaou | | 28.79 | % | | 30.30 | % | | 30.30 | % | | 124 | | 114 | | 92 | | | 27.60 | % | | | 28.03 | % | | | 28.79 | % | | | 119 | | | | 125 | | | | 124 | | SCP Limited | | 10.00 | % | | 10.00 | % | | 10.00 | % | | 89 | | 96 | | 91 | | Dolphin Energy Ltd (Del) Abu Dhabi | | 24.50 | % | | 24.50 | % | | 24.50 | % | | 118 | | 85 | | 37 | | | 24.50 | % | | | 24.50 | % | | | 24.50 | % | | | 208 | | | | 172 | | | | 118 | | Qatar Liquefied Gas Company Limited II (Train B) | | 16.70 | % | | 16.70 | % | | 16.70 | % | | 143 | | 82 | | 86 | | | 16.70 | % | | | 16.70 | % | | | 16.70 | % | | | 209 | | | | 184 | | | | 143 | | Moattama Gas Transportation Cy | | 31.24 | % | | 31.24 | % | | 31.24 | % | | 51 | | 65 | | 53 | | Ocensa | | 15.20 | % | | 15.20 | % | | 15.20 | % | | 85 | | 60 | | 57 | | Gasoducto Gasandes Argentina | | 56.50 | % | | 56.50 | % | | 56.50 | % | | 46 | | 58 | | 74 | | Gaz transport & Technigaz(a) | | 30.00 | % | | 30.00 | % | | 30.00 | % | | 26 | | 53 | | 46 | | Laffan Refinery | | 10.00 | % | | 10.00 | % | | 10.00 | % | | 60 | | 53 | | 39 | | Shtokman Development AG(b) | | 25.00 | % | | 25.00 | % | | — | | | 162 | | 35 | | — | | 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 | | — | | | — | | | — | | | 388 | | 315 | | 277 | | | — | | | | — | | | | — | | | | 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 | | | | | | | | 4,260 | | 3,891 | | 3,021 | | | | | | | | | 8,932 | | | | 5,002 | | | | 4,260 | | CEPSA (Downstream share) | | 48.83 | % | | 48.83 | % | | 48.83 | % | | 1,927 | | 1,810 | | 1,932 | | Saudi Aramco Total Refining & Petrochemicals(b) | | 37.50 | % | | 37.50 | % | | — | | | 60 | | 75 | | — | | Wepec | | 22.41 | % | | 22.41 | % | | 22.41 | % | | — | | — | | 70 | | 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 | | | — | | | — | | | 123 | | 73 | | 103 | | | — | | | | — | | | | — | | | | 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 | | | | | | | | 2,110 | | 1,958 | | 2,105 | | | | | | | | | 699 | | | | 2,782 | | | | 2,110 | | CEPSA (Chemicals share) | | 48.83 | % | | 48.83 | % | | 48.83 | % | | 396 | | 424 | | 524 | | Qatar Petrochemical Company Ltd | | 20.00 | % | | 20.00 | % | | 20.00 | % | | 205 | | 192 | | 150 | | 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 | | — | | | — | | | — | | | 51 | | 61 | | 54 | | | — | | | | — | | | | — | | | | 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 | | | | | | | | 652 | | 677 | | 728 | | | | | | | | | 1,118 | | | | 1,349 | | | | 652 | | Sanofi-Aventis | | 7.39 | % | | 11.38 | % | | 13.06 | % | | 4,235 | | 6,137 | | 6,851 | | Other | | — | | | — | | | — | | | — | | — | | — | | Sanofi(b) | | | | — | | | | — | | | | 7.39 | % | | | — | | | | — | | | | 4,235 | | Total associates | | | | | | | | | | — | | | | — | | | | 4,235 | | Total jointly-controlled entities | | | | | — | | | | — | | | | — | | Total Corporate | | | 4,235 | | 6,137 | | 6,851 | | | | — | | | | — | | | | 4,235 | | Total investments | | | 11,257 | | 12,663 | | 12,705 | | | | | | | | | 10,749 | | | | 9,133 | | | | 11,257 | | Loans | | | 2,367 | | 2,005 | | 2,575 | | | | 2,246 | | | | 2,383 | | | | 2,367 | | Total investments and loans | | | 13,624 | | 14,668 | | 15,280 | | | | 12,995 | | | | 11,516 | | | | 13,624 | |
(a) | Investment accounted for by the equity method as from 2007.2010. |
(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 2008.2011. |
| Equity in income (loss)(€ million) | | As of December 31, | | | | | 2009 | | 2008 | | 2007 | | 2009 | | 2008 | | 2007 | | | | | | | | | | | | | | | | | % owned | | | | equity in income (loss) | | | As of December 31, | | For the year ended December 31, | | | | | 2011 | | 2010 | | 2009 | | 2011 | | 2010 | | 2009 | | Equity in income (loss) (M€) | | | % owned | | Equity in income (loss) | | NLNG | | 15.00 | % | | 15.00 | % | | 15.00 | % | | 227 | | | 554 | | | 477 | | | | 15.00 | % | | | 15.00 | % | | | 15.00 | % | | | 374 | | | | 207 | | | | 227 | | PetroCedeño — EM(a) | | 30.32 | % | | 30.32 | % | | 30.32 | % | | 166 | | | 193 | | | — | | | | 30.32 | % | | | 30.32 | % | | | 30.32 | % | | | 55 | | | | 195 | | | | 166 | | CEPSA (Upstream share)(d) | | 48.83 | % | | 48.83 | % | | 48.83 | % | | 23 | | | 50 | | | 88 | | | | — | | | | 48.83 | % | | | 48.83 | % | | | 15 | | | | 57 | | | | 23 | | Angola LNG Ltd.(a) | | 13.60 | % | | 13.60 | % | | 13.60 | % | | 9 | | | 10 | | | 7 | | | | 13.60 | % | | | 13.60 | % | | | 13.60 | % | | | 6 | | | | 8 | | | | 9 | | Qatargas | | 10.00 | % | | 10.00 | % | | 10.00 | % | | 114 | | | 126 | | | 74 | | | | 10.00 | % | | | 10.00 | % | | | 10.00 | % | | | 196 | | | | 136 | | | | 114 | | Société du Terminal Méthanier de Fos Cavaou | | 28.79 | % | | 30.30 | % | | 30.30 | % | | — | | | (5 | ) | | (2 | ) | | | 27.60 | % | | | 28.03 | % | | | 28.79 | % | | | 13 | | | | — | | | | — | | SCP Limited | | 10.00 | % | | 10.00 | % | | 10.00 | % | | 6 | | | 4 | | | 1 | | | Dolphin Energy Ltd (Del) Abu Dhabi | | 24.50 | % | | 24.50 | % | | 24.50 | % | | 94 | | | 83 | | | 5 | | | | 24.50 | % | | | 24.50 | % | | | 24.50 | % | | | 131 | | | | 121 | | | | 94 | | Qatar Liquefied Gas Company Limited II (Train B) | | 16.70 | % | | 16.70 | % | | 16.70 | % | | 8 | | | (11 | ) | | (5 | ) | | | 16.70 | % | | | 16.70 | % | | | 16.70 | % | | | 446 | | | | 288 | | | | 8 | | Moattama Gas Transportation Cy | | 31.24 | % | | 31.24 | % | | 31.24 | % | | 75 | | | 81 | | | 67 | | | Ocensa | | 15.20 | % | | 15.20 | % | | 15.20 | % | | 36 | | | — | | | — | | | Gasoducto Gasandes Argentina | | 56.50 | % | | 56.50 | % | | 56.50 | % | | (6 | ) | | (10 | ) | | (22 | ) | | Gaz transport & Technigaz(a) | | 30.00 | % | | 30.00 | % | | 30.00 | % | | 20 | | | 51 | | | 45 | | | Laffan Refinery | | 10.00 | % | | 10.00 | % | | 10.00 | % | | (4 | ) | | 2 | | | — | | | Shtokman Development AG(b) | | 25.00 | % | | 25.00 | % | | — | | | 4 | | | — | | | — | | | 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 | | — | | | — | | | — | | | 87 | | | 50 | | | 6 | | | | — | | | | — | | | | — | | | | 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 | | | | | | | | 859 | | | 1,178 | | | 741 | | | | | | | | | | 1,579 | | | | 1,187 | | | | 859 | | CEPSA (Downstream share) | | 48.83 | % | | 48.83 | % | | 48.83 | % | | 149 | | | 76 | | | 253 | | | Saudi Aramco Total Refining & Petrochemicals(b) | | 37.50 | % | | 37.50 | % | | — | | | (12 | ) | | — | | | — | | | Wepec | | 22.41 | % | | 22.41 | % | | 22.41 | % | | — | | | (110 | ) | | 14 | | | 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 | | | — | | | — | | | 81 | | | (13 | ) | | (1 | ) | | | — | | | | — | | | | — | | | | 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 | | | | | | | | 218 | | | (47 | ) | | 266 | | | | | | | | | | 42 | | | | 251 | | | | 218 | | CEPSA (Chemicals share) | | 48.83 | % | | 48.83 | % | | 48.83 | % | | 10 | | | 10 | | | 24 | | | Qatar Petrochemical Company Ltd | | 20.00 | % | | 20.00 | % | | 20.00 | % | | 74 | | | 66 | | | 55 | | | 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 | | | — | | | — | | | (5 | ) | | (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 | | | | | | | | 79 | | | 75 | | | 80 | | | | | | | | | | 304 | | | | 306 | | | | 79 | | Sanofi-Aventis | | 7.39 | % | | 11.38 | % | | 13.06 | % | | 486 | | | 515 | | | 688 | | | Other | | | — | | | — | | | — | | | — | | | Sanofi(b) | | | | — | | | | — | | | | 7.39 | % | | | — | | | | 209 | | | | 486 | | Total associates | | | | | | | | | | — | | | | 209 | | | | 486 | | Total jointly-controlled entities | | | | | — | | | | — | | | | — | | Total Corporate | | | 486 | | | 515 | | | 688 | | | | | — | | | | 209 | | | | 486 | | Total investments | | | 1,642 | | | 1,721 | | | 1,775 | | | | | 1,925 | | | | 1,953 | | | | 1,642 | |
(a) | Investment accounted for by the equity method as from 2007.2010. |
(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 2008.2011. |
The market value of the Group’s share in CEPSA amountedNovatek amounts to€2,8454,034 million as of December 31, 20092011 for an equity value of€2,7083,368 million. The market value of the Group’s share in Sanofi-Aventis amounted to€5,324 million as of December 31, 2009.
In Group share, the main financial items of the equity affiliates are as follows :follows: | | | | | As of December 31, (€ million) | | 2009 | | 2008 | Assets | | 22,681 | | 23,173 | Shareholders’ equity | | 11,257 | | 12,663 | Liabilities | | 11,424 | | 10,510 |
| For the year ended December 31, (€ million) | | 2009 | | | 2008 | | | 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 | | 14,434 | | | 19,982 | | | | 9,948 | | | | 5,631 | | | | 16,529 | | | | 2,575 | | | | 14,434 | | | | — | | Pre-tax income | | 2,168 | | | 2,412 | | | | 2,449 | | | | 119 | | | | 2,389 | | | | 166 | | | | 2,168 | | | | — | | Income tax | | (526 | ) | | (691 | ) | | | (594 | ) | | | (49 | ) | | | (568 | ) | | | (34 | ) | | | (526 | ) | | | — | | Net income | | 1,642 | | | 1,721 | | | | 1,855 | | | | 70 | | | | 1,821 | | | | 132 | | | | 1,642 | | |
13)OTHER INVESTMENTS | | | | | | | | As of December 31, 2009(€ million) | | Carrying amount | | Unrealized gain (loss) | | | Balance sheet value | Areva(a) | | 69 | | 58 | | | 127 | Arkema | | 15 | | 47 | | | 62 | Chicago Mercantile Exchange Group(b) | | 1 | | 9 | | | 10 | Olympia Energy Fund — energy investment fund(c) | | 35 | | (2 | ) | | 33 | Other publicly traded equity securities | | — | | — | | | — | Total publicly traded equity securities(d) | | 120 | | 112 | | | 232 | BBPP | | 72 | | — | | | 72 | BTC Limited | | 144 | | — | | | 144 | Other equity securities | | 714 | | — | | | 714 | Total other equity securities(d) | | 930 | | — | | | 930 | Other investments | | 1,050 | | 112 | | | 1,162 | | | | | | | | | As of December 31, 2008(€ million) | | Carrying amount | | Unrealized gain (loss) | | | Balance sheet value | Areva(a) | | 69 | | 59 | | | 128 | Arkema | | 16 | | 15 | | | 31 | Chicago Mercantile Exchange Group(b) | | 1 | | 5 | | | 6 | Olympia Energy Fund — energy investment fund(c) | | 36 | | (5 | ) | | 31 | Other publicly traded equity securities | | — | | — | | | — | Total publicly traded equity securities(d) | | 122 | | 74 | | | 196 | BBPP | | 75 | | — | | | 75 | BTC Limited | | 161 | | — | | | 161 | Other equity securities | | 733 | | — | | | 733 | Total other equity securities(d) | | 969 | | — | | | 969 | Other investments | | 1,091 | | 74 | | | 1,165 |
| | | | | | | As of December 31, 2007(€ million) | | 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 |
(a) | Unrealized gain based on the investment certificate. |
(b) | The Nymex Holdings Inc. securities have been traded during the acquisition process running from June 11 to August 22, 2008 through which Chicago Mercantile Exchange Group acquired all the Nymex Holdings Inc. securities. |
(c) | Securities acquired in 2008. |
(d) | Including cumulative impairments of€599 million in 2009,€608 million in 2008 and€632 million in 2007. |
These 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, 2011 (M€) | | Carrying amount | | | Unrealized gain (loss) | | | Balance sheet value | | Sanofi(a) | | | 2,100 | | | | 351 | | | | 2,451 | | Areva(b) | | | 69 | | | | 1 | | | | 70 | | Arkema | | | — | | | | — | | | | — | | Chicago Mercantile Exchange Group | | | 1 | | | | 6 | | | | 7 | | Olympia Energy Fund — energy investment fund | | | 38 | | | | (5 | ) | | | 33 | | Gevo | | | 15 | | | | (3 | ) | | | 12 | | Other publicly traded equity securities | | | 3 | | | | (1 | ) | | | 2 | | Total publicly traded equity securities(c) | | | 2,226 | | | | 349 | | | | 2,575 | | BBPP | | | 62 | | | | — | | | | 62 | | Ocensa(d) | | | 85 | | | | — | | | | 85 | | BTC Limited | | | 132 | | | | — | | | | 132 | | Other equity securities | | | 820 | | | | — | | | | 820 | | Total other equity securities(c) | | | 1,099 | | | | — | | | | 1,099 | | Other investments | | | 3,325 | | | | 349 | | | | 3,674 | | | | | | | | | | | | | | | As of December 31, 2010 (M€) | | Carrying amount | | | Unrealized gain (loss) | | | Balance sheet value | | Sanofi(a) | | | 3,510 | | | | (56 | ) | | | 3,454 | | Areva(b) | | | 69 | | | | 63 | | | | 132 | | Arkema | | | — | | | | — | | | | — | | Chicago Mercantile Exchange Group | | | 1 | | | | 9 | | | | 10 | | Olympia Energy Fund — energy investment fund | | | 37 | | | | (3 | ) | | | 34 | | Other publicly traded equity securities | | | 2 | | | | (1 | ) | | | 1 | | Total publicly traded equity securities(c) | | | 3,619 | | | | 12 | | | | 3,631 | | BBPP | | | 60 | | | | — | | | | 60 | | BTC Limited | | | 141 | | | | — | | | | 141 | | Other equity securities | | | 758 | | | | — | | | | 758 | | Total other equity securities(c) | | | 959 | | | | — | | | | 959 | | Other investments | | | 4,578 | | | | 12 | | | | 4,590 | |
| | | | | | | | | | | | | As of December 31, 2009 (M€) | | Carrying amount | | | Unrealized gain (loss) | | | Balance sheet value | | Areva(b) | | | 69 | | | | 58 | | | | 127 | | Arkema | | | 15 | | | | 47 | | | | 62 | | Chicago Mercantile Exchange Group | | | 1 | | | | 9 | | | | 10 | | Olympia Energy Fund — energy investment fund | | | 35 | | | | (2 | ) | | | 33 | | Other publicly traded equity securities | | | — | | | | — | | | | — | | Total publicly traded equity securities(c) | | | 120 | | | | 112 | | | | 232 | | BBPP | | | 72 | | | | — | | | | 72 | | BTC Limited | | | 144 | | | | — | | | | 144 | | Other equity securities | | | 714 | | | | — | | | | 714 | | Total other equity securities(c) | | | 930 | | | | — | | | | 930 | | Other investments | | | 1,050 | | | | 112 | | | | 1,162 | |
(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. |
(c) | Including cumulative impairments of€604 million in 2011,€597 million in 2010 and€599 million in 2009. |
(d) | End of the accounting for by the equity method of Ocensa in July 2011 (see Note 3 to the Consolidated Financial Statements). |
14)OTHER NON-CURRENT ASSETS | As of December 31, 2009(€ million) | | Gross value | | Valuation allowance | | Net value | | As of December 31, 2011 (M€) | | | Gross value | | | Valuation allowance | | Net value | | Deferred income tax assets | | 1,164 | | — | | | 1,164 | | | 1,767 | | | | — | | | | 1,767 | | Loans and advances(a) | | 1,871 | | (587 | ) | | 1,284 | | | 2,454 | | | | (399 | ) | | | 2,055 | | Other | | 633 | | — | | | 633 | | | 1,049 | | | | — | | | | 1,049 | | Total | | 3,668 | | (587 | ) | | 3,081 | | | 5,270 | | | | (399 | ) | | | 4,871 | |
| As of December 31, 2008(€ million) | | Gross value | | Valuation allowance | | Net value | | As of December 31, 2010 (M€) | | | Gross value | | | Valuation allowance | | Net value | | Deferred income tax assets | | 1,010 | | — | | | 1,010 | | | 1,378 | | | | — | | | | 1,378 | | Loans and advances(a) | | 1,932 | | (529 | ) | | 1,403 | | | 2,060 | | | | (464 | ) | | | 1,596 | | Other | | 631 | | — | | | 631 | | | 681 | | | | — | | | | 681 | | Total | | 3,573 | | (529 | ) | | 3,044 | | | 4,119 | | | | (464 | ) | | | 3,655 | |
| As of December 31, 2007(€ million) | | Gross value | | Valuation allowance | | Net value | | As of December 31, 2009 (M€) | | | Gross value | | | Valuation allowance | | Net value | | Deferred income tax assets | | 797 | | — | | | 797 | | | 1,164 | | | | — | | | | 1,164 | | Loans and advances(a) | | 1,378 | | (527 | ) | | 851 | | | 1,871 | | | | (587 | ) | | | 1,284 | | Other | | 507 | | — | | | 507 | | | 633 | | | | — | | | | 633 | | Total | | 2,682 | | (527 | ) | | 2,155 | | | 3,668 | | | | (587 | ) | | | 3,081 | |
(a) | Excluding loans to equity affiliates. |
Changes in the valuation allowance on loans and advances are detailed as follows: | | | | | | | | | | | | | | | For the year ended December 31, (€ million) | | Valuation allowance as of January 1, | | | Increases | | | Decreases | | Currency translation adjustment and other variations | | | Valuation allowance as of December 31, | | 2009 | | (529 | ) | | (19 | ) | | 29 | | (68 | ) | | (587 | ) | 2008 | | (527 | ) | | (33 | ) | | 52 | | (21 | ) | | (529 | ) | 2007 | | (488 | ) | | (13 | ) | | 6 | | (32 | ) | | (527 | ) |
| | | | | | | | | | | | | | | | | | | | | 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, 2009(€ million) | | Gross value | | Valuation allowance | | Net value | | As of December 31, 2011 (M€) | | | Gross value | | | Valuation allowance | | Net value | | Crude oil and natural gas | | 4,581 | | — | | | 4,581 | | | 4,735 | | | | (24 | ) | | | 4,711 | | Refined products | | 6,647 | | (18 | ) | | 6,629 | | | 9,706 | | | | (36 | ) | | | 9,670 | | Chemicals products | | 1,234 | | (113 | ) | | 1,121 | | | 1,489 | | | | (103 | ) | | | 1,386 | | Other inventories | | 1,822 | | (286 | ) | | 1,536 | | | 2,761 | | | | (406 | ) | | | 2,355 | | Total | | 14,284 | | (417 | ) | | 13,867 | | | 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, 2008(€ million) | | Gross value | | Valuation allowance | | | Net value | Crude oil and natural gas | | 2,772 | | (326 | ) | | 2,446 | Refined products | | 4,954 | | (416 | ) | | 4,538 | Chemicals products | | 1,419 | | (105 | ) | | 1,314 | Other inventories | | 1,591 | | (268 | ) | | 1,323 | Total | | 10,736 | | (1,115 | ) | | 9,621 |
| As of December 31, 2007(€ million) | | Gross value | | Valuation allowance | | Net value | | As of December 31, 2009 (M€) | | | Gross value | | | Valuation allowance | | Net value | | Crude oil and natural gas | | 4,746 | | — | | | 4,746 | | | 4,581 | | | | — | | | | 4,581 | | Refined products | | 6,874 | | (11 | ) | | 6,863 | | | 6,647 | | | | (18 | ) | | | 6,629 | | Chemicals products | | 1,188 | | (91 | ) | | 1,097 | | | 1,234 | | | | (113 | ) | | | 1,121 | | Other inventories | | 1,368 | | (223 | ) | | 1,145 | | | 1,822 | | | | (286 | ) | | | 1,536 | | Total | | 14,176 | | (325 | ) | | 13,851 | | | 14,284 | | | | (417 | ) | | | 13,867 | |
Changes in the valuation allowance on inventories are as follows: | | | | | | | | | | | | | For the year ended December 31,(€ million) | | Valuation allowance as of January 1, | | | Increase (net) | | | Currency translation adjustment and other variations | | | Valuation allowance as of December 31, | | 2009 | | (1,115 | ) | | 700 | | | (2 | ) | | (417 | ) | 2008 | | (325 | ) | | (740 | ) | | (50 | ) | | (1,115 | ) | 2007 | | (440 | ) | | 124 | | | (9 | ) | | (325 | ) |
| | | | | | | | | | | | | | | | | 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, 2009(€ million) | | Gross value | | Valuation allowance | | Net value | | As of December 31, 2011 (M€) | | | Gross value | | | Valuation allowance | | Net value | | Accounts receivable | | 16,187 | | (468 | ) | | 15,719 | | | 20,532 | | | | (483 | ) | | | 20,049 | | Recoverable taxes | | 2,156 | | — | | | 2,156 | | | 2,398 | | | | — | | | | 2,398 | | Other operating receivables | | 5,214 | | (69 | ) | | 5,145 | | | 7,750 | | | | (283 | ) | | | 7,467 | | Deferred income tax | | 214 | | — | | | 214 | | | — | | | | — | | | | — | | Prepaid expenses | | 638 | | — | | | 638 | | | 840 | | | | — | | | | 840 | | Other current assets | | 45 | | — | | | 45 | | | 62 | | | | — | | | | 62 | | Other current assets | | 8,267 | | (69 | ) | | 8,198 | | | 11,050 | | | | (283 | ) | | | 10,767 | |
| As of December 31, 2008(€ million) | | Gross value | | Valuation allowance | | Net value | | As of December 31, 2010 (M€) | | | Gross value | | | Valuation allowance | | Net value | | Accounts receivable | | 15,747 | | (460 | ) | | 15,287 | | | 18,635 | | | | (476 | ) | | | 18,159 | | Recoverable taxes | | 2,510 | | — | | | 2,510 | | | 2,227 | | | | — | | | | 2,227 | | Other operating receivables | | 6,227 | | (19 | ) | | 6,208 | | | 4,543 | | | | (136 | ) | | | 4,407 | | Deferred income tax | | 206 | | — | | | 206 | | | 151 | | | | — | | | | 151 | | Prepaid expenses | | 650 | | — | | | 650 | | | 657 | | | | — | | | | 657 | | Other current assets | | 68 | | — | | | 68 | | | 41 | | | | — | | | | 41 | | Other current assets | | 9,661 | | (19 | ) | | 9,642 | | | 7,619 | | | | (136 | ) | | | 7,483 | |
| As of December 31, 2007(€ million) | | Gross value | | Valuation allowance | | Net value | | As of December 31, 2009 (M€) | | | Gross value | | | Valuation allowance | | Net value | | Accounts receivable | | 19,611 | | (482 | ) | | 19,129 | | | 16,187 | | | | (468 | ) | | | 15,719 | | Recoverable taxes | | 2,735 | | — | | | 2,735 | | | 2,156 | | | | — | | | | 2,156 | | Other operating receivables | | 4,457 | | (27 | ) | | 4,430 | | | 5,214 | | | | (69 | ) | | | 5,145 | | Deferred income tax | | 112 | | — | | | 112 | | | 214 | | | | — | | | | 214 | | Prepaid expenses | | 687 | | — | | | 687 | | | 638 | | | | — | | | | 638 | | Other current assets | | 42 | | — | | | 42 | | | 45 | | | | — | | | | 45 | | Other current assets | | 8,033 | | (27 | ) | | 8,006 | | | 8,267 | | | | (69 | ) | | | 8,198 | |
Changes in the valuation allowance on “Accounts receivable” and “Other current assets” are as follows: | | | | | | | | | | | | | (€ million) | | Valuation allowance as of January 1, | | | Increase (net) | | | Currency translation adjustments and other variations | | | Valuation allowance as of December 31, | | Accounts receivable | | | | | | | | | | | | | 2009 | | (460 | ) | | (17 | ) | | 9 | | | (468 | ) | 2008 | | (482 | ) | | 9 | | | 13 | | | (460 | ) | 2007 | | (489 | ) | | (25 | ) | | 32 | | | (482 | ) | | | | | | Other current assets | | | | | | | | | | | | | 2009 | | (19 | ) | | (14 | ) | | (36 | ) | | (69 | ) | 2008 | | (27 | ) | | 7 | | | 1 | | | (19 | ) | 2007 | | (39 | ) | | (4 | ) | | 16 | | | (27 | ) |
| | | | | | | | | | | | | | | | | (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, 2011, the net portion of the overdue receivables includes in “Accounts receivable” and “Other current assets” is€3,556 million, of which€1,857 million has expired for less than 90 days,€365 million has expired between 90 days and 6 months,€746 million has expired between 6 and 12 months and€588 million has expired for more than 12 months. As of December 31, 2010, the net portion of the overdue receivables 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€3,610 million, of which€2,116 million has expired for less than 90 days,€486 million has expired between 90 days and 6 months,€246 million has expired between 6 and 12 months and€762 million has expired for more than 12 months. As of December 31, 2008, the net portion of the overdue receivables included in “Accounts receivable” and “Other current assets” was€3,744 million, of which€2,420 million had expired for less than 90 days,€729 million had expired between 90 days and 6 months,€54 million had expired between 6 and 12 months and€541 million had expired for more than 12 months.
17)SHAREHOLDERS’ EQUITY Number of Total SharesTOTAL shares The Company’s common shares, par value€2.50, as of December 31, 20092011 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 3,381,921,4583,446,401,650 shares as of December 31, 20092011 compared to 3,413,204,0253,439,391,697 shares as of December 31, 20082010 and 4,042,585,6053,381,921,458 as of December 31, 2007.2009. Variation of the share capital | | | | | | | As of January 1, 20072009 | | | | 2,425,767,953 | 2,371,808,074 | | 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(a)
| | | | (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(b)
| | | | (30,000,000 | ) | As of January 1, 2009
| | | | 2,371,808,074 | | Shares issued in connection with:
| | Exercise of TOTAL share subscription options | | 934,780 | | | | Exchange guarantee offered to the beneficiaries of Elf Aquitaine share subscription options | | | 480,030 | | Cancellation of shares(c)(a) | | | | | (24,800,000 | ) | As of December 31, 2009(d)January 1, 2010 | | | | 2,348,422,884 | 2,348,422,884 | | Shares issued in connection with: | | Exercise of TOTAL share subscription options | | | 1,218,047 | | As of January 1, 2011 | | | | | 2,349,640,931 | | Shares issued in connection with: | | Capital increase reserved for employees | | | 8,902,717 | | | | Exercise of TOTAL share subscription options | | | 5,223,665 | | As of December 31, 2011(b) | | | | | 2,363,767,313 | |
(a) | Decided by the Board of Directors on January 10, 2007. |
(b) | Decided by the Board of Directors on July 31, 2008. |
(c) | Decided by the Board of Directors on July 30, 2009. |
(d)(b) | Including 115,407,190109,554,173 treasury shares deducted from consolidated shareholders’ equity. |
The variation of both weighted-average number of shares and weighted-average number of diluted shares respectively used in the calculation of earnings per share and fully-diluted earnings per share is detailed as follows: | | | 2009 | | 2008 | | 2007 | | | 2011 | | 2010 | | 2009 | | Number of shares as of January 1, | | 2,371,808,074 | | 2,395,532,097 | | 2,425,767,953 | | | | 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 | | 221,393 | | | 742,588 | | | 1,020,190 | | | | 3,412,123 | | | | 412,114 | | | | 221,393 | | Exercise of TOTAL share purchase options | | 93,827 | | | 2,426,827 | | | 4,141,186 | | | | — | | | | 984,800 | | | | 93,827 | | Exchange guarantee offered to the beneficiaries of Elf Aquitaine share subscription options | | 393,623 | | | 86,162 | | | 163,074 | | | | — | | | | — | | | | 393,623 | | TOTAL restricted shares | | 1,164,389 | | | 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 | | | — | | | | 5,935,145 | | | | — | | | | — | | TOTAL shares held by TOTAL S.A. or by its subsidiaries and deducted from shareholders’ equity | | (143,082,095 | ) | | (168,290,440 | ) | | (176,912,968 | ) | | | (112,487,679 | ) | | | (115,407,190 | ) | | | (143,082,095 | ) | Weighted-average number of shares | | 2,230,599,211 | | | 2,234,856,551 | | | 2,255,294,231 | | | | 2,247,479,529 | | | | 2,234,829,043 | | | | 2,230,599,211 | | Dilutive effect | | | | | | | | | | | | | — | | TOTAL share subscription and purchase options | | 1,711,961 | | | 6,784,200 | | | 13,698,928 | | | | 470,095 | | | | 1,758,006 | | | | 1,711,961 | | TOTAL restricted shares | | 4,920,599 | | | 4,172,944 | | | 4,387,761 | | | TOTAL performance shares | | | | 6,174,808 | | | | 6,031,963 | | | | 4,920,599 | | Global free TOTAL share plan(a) | | | | 2,523,233 | | | | 1,504,071 | | | | Exchange guarantee offered to the beneficiaries of Elf Aquitaine share subscription options | | 60,428 | | | 460,935 | | | 655,955 | | | | — | | | | — | | | | 60,428 | | Capital increase reserved for employees | | — | | | 383,912 | | | 348,109 | | | | 303,738 | | | | 371,493 | | | | — | | Weighted-average number of diluted shares | | 2,237,292,199 | | | 2,246,658,542 | | | 2,274,384,984 | | | | 2,256,951,403 | | | | 2,244,494,576 | | | | 2,237,292,199 | |
(a) | The Board of Directors approved on May 21, 2010 the implementation and conditions of a global free share plan intended for the Group employees. |
Capital 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 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 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 (€42.5 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 ranand the subscription price. 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. 4,870,386April 1, 2011 included, and acknowledged that the subscription price per ordinary share would be set at€34.80. With respect to this capital increase, 8,902,717 TOTAL shares were subscribed by employees pursuant to the capital increase.and created on April 28, 2011. Share cancellation Pursuant to the authorization granted by the shareholders’ meeting held on May 11, 2007 authorizing reduction of capital by cancellation of shares held by the Company within the limit of 10% of the outstanding capital every 24 months, the Board of Directors decided on July 30, 2009 to cancel 24,800,000 shares acquired in 2008 at an average price of€49.28 per share. Treasury shares (TOTAL Sharesshares held by TOTAL S.A.) As of December 31, 2011, TOTAL S.A. holds 9,222,905 of its own shares, representing 0.39% of its share capital, detailed as follows: 6,712,528 shares allocated to TOTAL share grant plans for Group employees; 2,510,377 shares intended to be allocated to new TOTAL share purchase option plans or to new share grant plans. These shares are deducted from the consolidated shareholders’ equity. As of December 31, 2010, TOTAL S.A. held 12,156,411 of its own shares, representing 0.52% of its share capital, detailed as follows: 6,012,460 shares allocated to TOTAL share grant plans for Group employees; 6,143,951 shares intended to be allocated to new TOTAL share purchase option plans or to new share grant plans. These shares were deducted from the consolidated shareholders’ equity. As of December 31, 2009, TOTAL S.A. held 15,075,922 of its own shares, representing 0.64% of its share capital, detailed as follows: 6,017,499 shares allocated to covering TOTAL share purchase option plans for Group employees and executive officers; 5,799,400 shares allocated to TOTAL restricted sharesshare grant plans for Group employees; and 3,259,023 shares intended to be allocated to new TOTAL share purchase option plans or to new restricted sharesshare grant plans. These shares are deducted from the consolidated shareholders’ equity.
As of December 31, 2008, TOTAL S.A. held 42,750,827 of its own shares, representing 1.80% of its share capital, detailed as follows:
12,627,522 shares allocated to covering TOTAL share purchase option plans for Group employees;
5,323,305 shares allocated to TOTAL restricted shares plans for Group employees; and
24,800,000 shares purchased for cancellation between January and October 2008 pursuant to the authorization granted by the shareholders’ meetings held on May 11, 2007 and May 16, 2008. The Board of Directors on July 30, 2009 decided to cancel these 24,800,000 shares acquired at an average price of€49.28 per share.
These shares were deducted from the consolidated shareholders’ equity.
As of December 31, 2007, TOTAL S.A. held 51,089,964 of its own shares, representing 2.13% of its share capital, detailed as follows:
16,343,349 shares allocated to covering TOTAL share purchase option plans for Group employees;
4,746,615 shares allocated to TOTAL restricted 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.
These shares were deducted from the consolidated shareholders’ equity. TOTAL Sharesshares held by Group subsidiaries As of December 31, 2009, 20082011, 2010 and 2007,2009, TOTAL S.A. held indirectly through its subsidiaries 100,331,268 of its own shares, representing 4.24% of its share capital as of December 31, 2011, 4.27% of its share capital as of December 31, 2010 and 4.27% of its share capital as of December 31, 2009 4.23% of its share capital as of December 31, 2008 and 4.19% of its share capital as of December 31, 2007 detailed as follows: 2,023,672 shares held by a consolidated subsidiary, Total Nucléaire, 100% indirectly controlled by TOTAL S.A.; and 98,307,596 shares held by subsidiaries of Elf Aquitaine (Financière Valorgest, Sogapar and Fingestval)., 100% indirectly controlled by TOTAL S.A. These shares are deducted from the consolidated shareholders’ equity. Dividend TOTAL S.A. paid on May 22, 200926, 2011 the balance of the dividend of€1.14 per share for the 20082010 fiscal year (the ex-dividend date was May 19, 2009)23, 2011). In addition, TOTAL S.A. paid on November 18, 2009 antwo quarterly interim dividends for the fiscal year 2011: The first quarterly interim dividend of€1.140.57 per share for the fiscal year 20092011, decided by the Board of Directors on April 28, 2011, was paid on September 22, 2011 (the ex-dividend date was November 13, 2009)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 21, 201011, 2012 to pay a dividend of€2.28 per share for the 20092011 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 surplus In accordance with French law, the paid-in surplus corresponds to share premiums of the parent company which can be capitalized or used to offset losses if the legal reserve has reached its minimum required level. The amount of the paid-in surplus may also be distributed subject to taxation unless the unrestricted reserves of the parent company are distributed prior to this item. As of December 31, 2009,2011, paid-in surplus amounted to€27,17127,655 million (€28,28427,208 million as of December 31, 20082010 and€29,59827,171 million as of December 31, 2007)2009). Reserves Under French law, 5% of net income must be transferred to the legal reserve until the legal reserve reaches 10% of the nominal value of the share capital. This reserve cannot be distributed to the shareholders other than upon liquidation but can be used to offset losses. If wholly distributed, the unrestricted reserves of the parent company would be taxed for an approximate amount of€539 million as of December 31, 2011 (€514 million as of December 31, 2009.2010 and as of December 31, 2009). Other comprehensive income Detail of other comprehensive income showing items reclassified from equity to net income is presented in the table below: | | | | | | | | | | | | | | | | | | | For the year ended December 31,(€ million) | | 2009 | | | 2008 | | | 2007 | | Currency translation adjustment | | | | | (244 | ) | | | | | (722 | ) | | | | | (2,703 | ) | – Unrealized gain/(loss) of the period | | (243 | ) | | | | | (722 | ) | | | | | (2,703 | ) | | | | – Less gain/(loss) included in net income | | 1 | | | | | | — | | | | | | — | | | | | | | | | | | | Available for sale financial assets | | | | | 38 | | | | | | (254 | ) | | | | | 111 | | – Unrealized gain/(loss) of the period | | 38 | | | | | | (254 | ) | | | | | 111 | | | | | – Less gain/(loss) included in net income | | — | | | | | | — | | | | | | — | | | | | | | | | | | | Cash flow hedge | | | | | 128 | | | | | | — | | | | | | — | | – Unrealized gain/(loss) of the period | | 349 | | | | | | — | | | | | | — | | | | | – Less gain/(loss) included in net income | | 221 | | | | | | — | | | | | | — | | | | | | | | | | | | Share of other comprehensive income of equity affiliates, net amount | | | | | 234 | | | | | | 173 | | | | | | (406 | ) | | | | | | | | Other | | | | | (5 | ) | | | | | 1 | | | | | | (3 | ) | – Unrealized gain/(loss) of the period | | (5 | ) | | | | | 1 | | | | | | (3 | ) | | | | – Less gain/(loss) included in net income | | — | | | | | | — | | | | | | — | | | | | | | | | | | | Tax effect | | | | | (38 | ) | | | | | 30 | | | | | | (6 | ) | Total other comprehensive income, net amount | | | | | 113 | | | | | | (772 | ) | | | | | (3,007 | ) |
| | | | | | | | | | | | | | | | | | | | | | | | | For the year ended December 31, (M€) | | 2011 | | | 2010 | | | 2009 | | Currency translation adjustment | | | | | | | 1,498 | | | | | | | | 2,231 | | | | | | | | (244 | ) | — Unrealized gain/(loss) of the period | | | 1,435 | | | | | | | | 2,234 | | | | | | | | (243 | ) | | | | | — Less gain/(loss) included in net income | | | (63 | ) | | | | | | | 3 | | | | | | | | 1 | | | | | | Available for sale financial assets | | | | | | | 337 | | | | | | | | (100 | ) | | | | | | | 38 | | — Unrealized gain/(loss) of the period | | | 382 | | | | | | | | (50 | ) | | | | | | | 38 | | | | | | — Less gain/(loss) included in net income | | | 45 | | | | | | | | 50 | | | | | | | | — | | | | | | Cash flow hedge | | | | | | | (84 | ) | | | | | | | (80 | ) | | | | | | | 128 | | — Unrealized gain/(loss) of the period | | | (131 | ) | | | | | | | (195 | ) | | | | | | | 349 | | | | | | — Less gain/(loss) included in net income | | | (47 | ) | | | | | | | (115 | ) | | | | | | | 221 | | | | | | | | | | | | | Share of other comprehensive income of equity affiliates, net amount | | | | | | | (15 | ) | | | | | | | 302 | | | | | | | | 234 | | Other | | | | | | | (2 | ) | | | | | | | (7 | ) | | | | | | | (5 | ) | — Unrealized gain/(loss) of the period | | | (2 | ) | | | | | | | (7 | ) | | | | | | | (5 | ) | | | | | — Less gain/(loss) included in net income | | | — | | | | | | | | — | | | | | | | | — | | | | | | Tax effect | | | | | | | (55 | ) | | | | | | | 28 | | | | | | | | (38 | ) | Total other comprehensive income, net amount | | | | | | | 1,679 | | | | | | | | 2,374 | | | | | | | | 113 | |
Tax effects relating to each component of other comprehensive income are as follows: | For the year ended December 31, (€ million) | | 2009 | | 2008 | | 2007 | | | | | Pre-tax amount | | Tax effect | | Net amount | | Pre-tax amount | | Tax effect | | Net amount | | Pre-tax amount | | Tax effect | | Net amount | | | 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 | | (244 | ) | | | | (244 | ) | | (722 | ) | | | | (722 | ) | | (2,703 | ) | | | | (2,703 | ) | | | 1,498 | | | | — | | | | 1,498 | | | | 2,231 | | | | — | | | | 2,231 | | | | (244 | ) | | | — | | | | (244 | ) | Available for sale financial assets | | 38 | | | 4 | | | 42 | | | (254 | ) | | 30 | | (224 | ) | | 111 | | | (6 | ) | | 105 | | | | 337 | | | | (93 | ) | | | 244 | | | | (100 | ) | | | 2 | | | | (98 | ) | | | 38 | | | | 4 | | | | 42 | | Cash flow hedge | | 128 | | | (42 | ) | | 86 | | | — | | | | | — | | | — | | | | | — | | | | (84 | ) | | | 38 | | | | (46 | ) | | | (80 | ) | | | 26 | | | | (54 | ) | | | 128 | | | | (42 | ) | | | 86 | | Share of other comprehensive income of equity affiliates, net amount | | 234 | | | | | 234 | | | 173 | | | | | 173 | | | (406 | ) | | | | (406 | ) | | | (15 | ) | | | — | | | | (15 | ) | | | 302 | | | | — | | | | 302 | | | | 234 | | | | — | | | | 234 | | Other | | (5 | ) | | | | (5 | ) | | 1 | | | | | 1 | | | (3 | ) | | | | (3 | ) | | | (2 | ) | | | — | | | | (2 | ) | | | (7 | ) | | | — | | | | (7 | ) | | | (5 | ) | | | — | | | | (5 | ) | Total other comprehensive income | | 151 | | | (38 | ) | | 113 | | | (802 | ) | | 30 | | (772 | ) | | (3,001 | ) | | (6 | ) | | (3,007 | ) | | | 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,(€ million) | | 2009 | | 2008 | | 2007 | | As of December 31, (M€) | | | 2011 | | | 2010 | | | 2009 | | Pension benefits liabilities | | 1,236 | | 1,187 | | 1,721 | | | 1,268 | | | | 1,268 | | | | 1,236 | | Other benefits liabilities | | 592 | | 608 | | 611 | | | 620 | | | | 605 | | | | 592 | | Restructuring reserves (early retirement plans) | | 212 | | 216 | | 195 | | | 344 | | | | 298 | | | | 212 | | Total | | 2,040 | | 2,011 | | 2,527 | | | 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,(€ million) | | 2009 | | | 2008 | | | 2007 | | | 2009 | | | 2008 | | | 2007 | | | | | | | | | Change in benefit obligation | | | | | | | | | | | | | | | | | | | Benefit obligation at beginning of year | | 7,405 | | | 8,129 | | | 8,742 | | | 544 | | | 583 | | | 648 | | Service cost | | 134 | | | 143 | | | 160 | | | 10 | | | 14 | | | 12 | | Interest cost | | 428 | | | 416 | | | 396 | | | 30 | | | 24 | | | 28 | | Curtailments | | (5 | ) | | (3 | ) | | (9 | ) | | (1 | ) | | — | | | — | | Settlements | | (3 | ) | | (5 | ) | | (20 | ) | | — | | | (4 | ) | | — | | Special termination benefits | | — | | | — | | | — | | | — | | | — | | | — | | Plan participants’ contributions | | 10 | | | 12 | | | 10 | | | — | | | — | | | — | | Benefits paid | | (484 | ) | | (463 | ) | | (448 | ) | | (33 | ) | | (37 | ) | | (40 | ) | Plan amendments | | 118 | | | 12 | | | (70 | ) | | (2 | ) | | (12 | ) | | (2 | ) | Actuarial losses (gains) | | 446 | | | (248 | ) | | (384 | ) | | — | | | (27 | ) | | (38 | ) | Foreign currency translation and other | | 120 | | | (588 | ) | | (248 | ) | | (1 | ) | | 3 | | | (25 | ) | Benefit obligation at year-end | | 8,169 | | | 7,405 | | | 8,129 | | | 547 | | | 544 | | | 583 | | | | | | | | | Change in fair value of plan assets | | | | | | | | | | | | | | | | | | | Fair value of plan assets at beginning of year | | (5,764 | ) | | (6,604 | ) | | (6,401 | ) | | — | | | — | | | — | | Expected return on plan assets | | (343 | ) | | (402 | ) | | (387 | ) | | — | | | — | | | — | | Actuarial losses (gains) | | (317 | ) | | 1,099 | | | 140 | | | — | | | — | | | — | | Settlements | | 2 | | | 2 | | | 8 | | | — | | | — | | | — | | Plan participants’ contributions | | (10 | ) | | (12 | ) | | (10 | ) | | — | | | — | | | — | | Employer contributions(a) | | (126 | ) | | (855 | ) | | (556 | ) | | — | | | — | | | — | | Benefits paid | | 396 | | | 375 | | | 349 | | | — | | | — | | | — | | Foreign currency translation and other | | (124 | ) | | 633 | | | 253 | | | — | | | — | | | — | | Fair value of plan assets at year-end | | (6,286 | ) | | (5,764 | ) | | (6,604 | ) | | — | | | — | | | — | | | | | | | | | Unfunded status | | 1,883 | | | 1,641 | | | 1,525 | | | 547 | | | 544 | | | 583 | | Unrecognized prior service cost | | (153 | ) | | (48 | ) | | (49 | ) | | 15 | | | 21 | | | 18 | | Unrecognized actuarial (losses) gains | | (1,045 | ) | | (953 | ) | | (160 | ) | | 30 | | | 43 | | | 10 | | Asset ceiling | | 9 | | | 5 | | | 5 | | | — | | | — | | | — | | Net recognized amount | | 694 | | | 645 | | | 1,321 | | | 592 | | | 608 | | | 611 | | Pension benefits and other benefits liabilities | | 1,236 | | | 1,187 | | | 1,721 | | | 592 | | | 608 | | | 611 | | Other non-current assets | | (542 | ) | | (542 | ) | | (400 | ) | | — | | | — | | | — | |
(a) | In 2008, the Group covered certain employee pension benefit plans through insurance companies for an amount of€757 million. |
| | | | | | | | | | | | | | | | | | | | | | | | | | | 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, 2009,2011, the fair value of pension benefits and other pension benefits which are entirely or partially funded amountedamounts to€7,2068,277 million and the present value of the unfunded benefits amountedamounts to€1,5101,673 million (against€6,5157,727 million and€1,4341,636 million respectively as of December 31, 20082010 and€7,1757,206 million and€1,5371,510 million respectively as of December 31, 2007)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 December 31,(€ million) | | 2009 | | 2008 | | | 2007 | | Experience actuarial gains (losses) related to the defined benefit obligation | | 108 | | (12 | ) | | (80 | ) | Experience actuarial gains (losses) related to the fair value of plan assets | | 317 | | (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, (€ million) | | 2009 | | 2008 | | 2007 | | 2006 | | 2005 | | | As of December 31, (M€) | | | 2011 | | 2010 | | 2009 | | 2008 | | 2007 | | Pension benefits | | | | | | | | | | | | | | | | | | | | | Benefit obligation | | 8,169 | | | 7,405 | | | 8,129 | | | 8,742 | | | 9,647 | | | | 9,322 | | | | 8,740 | | | | 8,169 | | | | 7,405 | | | | 8,129 | | Fair value of plan assets | | (6,286 | ) | | (5,764 | ) | | (6,604 | ) | | (6,401 | ) | | (6,274 | ) | | | (7,028 | ) | | | (6,809 | ) | | | (6,286 | ) | | | (5,764 | ) | | | (6,604 | ) | Unfunded status | | 1,883 | | | 1,641 | | | 1,525 | | | 2,341 | | | 3,373 | | | | 2,294 | | | | 1,931 | | | | 1,883 | | | | 1,641 | | | | 1,525 | | Other benefits | | | | | | | | | | | | | | | | | | | | | Benefits obligation | | 547 | | | 544 | | | 583 | | | 648 | | | 774 | | | | 628 | | | | 623 | | | | 547 | | | | 544 | | | | 583 | | Fair value of plan assets | | — | | | — | | | — | | | — | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | Unfunded status | | 547 | | | 544 | | | 583 | | | 648 | | | 774 | | | | 628 | | | | 623 | | | | 547 | | | | 544 | | | | 583 | |
The Group expects to contribute€152182 million to its pension plans in 2010.2012. | | | | | Estimated future payments (€ million) | | Pension benefits | | Other benefits | 2010 | | 489 | | 35 | 2011 | | 468 | | 36 | 2012 | | 481 | | 36 | 2013 | | 472 | | 36 | 2014 | | 474 | | 37 | 2015-2019 | | 2,508 | | 195 |
| | | | | | | | | 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, | | 2009 | | 2008 | | 2007 | | | 2011 | | 2010 | | 2009 | | Equity securities | | 31 | % | | 25 | % | | 36 | % | | | 29 | % | | | 34 | % | | | 31% | | Debt securities | | 62 | % | | 56 | % | | 56 | % | | | 64 | % | | | 60 | % | | | 62% | | Monetary | | 3 | % | | 16 | % | | 4 | % | | | 4 | % | | | 3 | % | | | 3% | | Real estate | | 4 | % | | 3 | % | | 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 prime corporate bonds according to a benchmark per country of different market data on the closing date. | | | | | | | | | | | | | | | | | | | | | | | | | | | Assumptions used to determine benefits obligations | | | | Pension benefits | | | Other benefits | | As of December 31, | | | | 2011 | | | 2010 | | | 2009 | | | 2011 | | | 2010 | | | 2009 | | Discount rate (weighted average for all regions) | | | | | 4.61 | % | | | 5.01 | % | | | 5.41 | % | | | 4.70 | % | | | 5.00 | % | | | 5.60% | | | | Of which Euro zone | | | 4.21 | % | | | 4.58 | % | | | 5.12 | % | | | 4.25 | % | | | 4.55 | % | | | 5.18% | | | | Of which United States | | | 5.00 | % | | | 5.49 | % | | | 6.00 | % | | | 4.97 | % | | | 5.42 | % | | | 5.99% | | | | Of which United Kingdom | | | 4.75 | % | | | 5.50 | % | | | 5.50 | % | | | — | | | | — | | | | — | | Average expected rate of salary increase | | | | | 4.69 | % | | | 4.55 | % | | | 4.50 | % | | | — | | | | — | | | | — | | Expected rate of healthcare inflation | | | | | | | | | | | | | | | | | | | | | | | | | | | — initial rate | | | | | — | | | | — | | | | — | | | | 4.82 | % | | | 4.82 | % | | | 4.91% | | — ultimate rate | | | | | — | | | | — | | | | — | | | | 3.77 | % | | | 3.75 | % | | | 3.79% | | | | | | Assumptions used to determine the net periodic benefit cost (income) | | | | Pension benefits | | | Other benefits | | For the year ended December 31, | | | | 2011 | | | 2010 | | | 2009 | | | 2011 | | | 2010 | | | 2009 | | Discount rate (weighted average for all regions) | | | | | 5.01 | % | | | 5.41 | % | | | 5.93 | % | | | 5.00 | % | | | 5.60 | % | | | 6.00% | | | | Of which Euro zone | | | 4.58 | % | | | 5.12 | % | | | 5.72 | % | | | 4.55 | % | | | 5.18 | % | | | 5.74% | | | | Of which United States | | | 5.49 | % | | | 6.00 | % | | | 6.23 | % | | | 5.42 | % | | | 5.99 | % | | | 6.21% | | | | Of which United Kingdom | | | 5.50 | % | | | 5.50 | % | | | 6.00 | % | | | — | | | | — | | | | 6.00% | | Average expected rate of salary increase | | | | | 4.55 | % | | | 4.50 | % | | | 4.56 | % | | | — | | | | — | | | | — | | Expected return on plan assets | | | | | 5.90 | % | | | 6.39 | % | | | 6.14 | % | | | — | | | | — | | | | — | | Expected rate of healthcare inflation | | | | | | | | | | | | | | | | | | | | | | | | | | | — initial rate | | | | | — | | | | — | | | | — | | | | 4.82 | % | | | 4.91 | % | | | 4.88% | | — ultimate rate | | | | | — | | | | — | | | | — | | | | 3.75 | % | | | 3.79 | % | | | 3.64% | |
| | | | | | | | | | | | | | | | | | | | Assumptions used to determine benefits obligations | | Pension benefits | | | | | Other benefits | As of December 31, | | 2009 | | | 2008 | | | 2007 | | | | | 2009 | | | 2008 | | | 2007 | Discount rate (weighted average for all regions) | | 5.41 | % | | 5.93 | % | | 5.50 | % | | | | 5.60 | % | | 6.00 | % | | 5.50% | Of which Euro zone | | 5.12 | % | | 5.72 | % | | 5.15 | % | | | | 5.18 | % | | 5.74 | % | | 5.14% | Of which United States | | 6.00 | % | | 6.23 | % | | 6.00 | % | | | | 5.99 | % | | 6.21 | % | | 5.98% | Of which United Kingdom | | 5.50 | % | | 6.00 | % | | 5.75 | % | | | | — | | | 6.00 | % | | 5.75% | Average expected rate of salary increase | | 4.50 | % | | 4.56 | % | | 4.29 | % | | | | — | | | — | | | — | Expected rate of healthcare inflation | | | | | | | | | | | | | | | | | | | | — initial rate | | — | | | — | | | — | | | | | 4.91 | % | | 4.88 | % | | 5.16% | — ultimate rate | | — | | | — | | | — | | | | | 3.79 | % | | 3.64 | % | | 3.64% | | | | | | | | | | | | | | | | | | | | | Assumptions used to determine the net periodic benefit cost (income) | | Pension benefits | | | | | Other benefits | For the year ended December 31, | | 2009 | | | 2008 | | | 2007 | | | | | 2009 | | | 2008 | | | 2007 | Discount rate (weighted average for all regions) | | 5.93 | % | | 5.50 | % | | 4.69 | % | | | | 6.00 | % | | 5.50 | % | | 4.89% | Of which Euro zone | | 5.72 | % | | 5.15 | % | | 4.23 | % | | | | 5.74 | % | | 5.14 | % | | 4.30% | Of which United States | | 6.23 | % | | 6.00 | % | | 5.50 | % | | | | 6.21 | % | | 5.98 | % | | 5.49% | Of which United Kingdom | | 6.00 | % | | 5.75 | % | | 5.00 | % | | | | 6.00 | % | | 5.75 | % | | 5.00% | Average expected rate of salary increase | | 4.56 | % | | 4.29 | % | | 4.14 | % | | | | — | | | — | | | — | Expected return on plan assets | | 6.14 | % | | 6.60 | % | | 6.26 | % | | | | — | | | — | | | — | Expected rate of healthcare inflation | | | | | | | | | | | | | | | | | | | | — initial rate | | — | | | — | | | — | | | | | 4.88 | % | | 5.16 | % | | 5.57% | — ultimate rate | | — | | | — | | | — | | | | | 3.64 | % | | 3.64 | % | | 3.65% |
A 0.5% increase or decrease in discount rates –— all other things being equal –— would have the following approximate impact: | | | | | | (€ million) | | 0.5% increase | | | 0.5% decrease | Benefit obligation as of December 31, 2009 | | (452 | ) | | 500 | 2010 net periodic benefit cost (income) | | (21 | ) | | 29 |
| | | | | | | | | (M€) | | 0.5% increase | | | 0.5% decrease | | Benefit obligation as of December 31, 2011 | | | (513 | ) | | | 551 | | 2012 net periodic benefit cost (income) | | | (41 | ) | | | 56 | |
A 0.5% increase or decrease in expected return on plan assets rate –— all other things being equal –— would have an impact of€2931 million on 20102012 net periodic benefit cost (income). The components of the net periodic benefit cost (income) in 2009, 20082011, 2010 and 20072009 are: | | | | | | | | | | | | | | | | | | | | | | | Pension benefits | | | | | Other benefits | | For the year ended December 31,(€ million) | | 2009 | | | 2008 | | | 2007 | | | | | 2009 | | | 2008 | | | 2007 | | Service cost | | 134 | | | 143 | | | 160 | | | | | 10 | | | 14 | | | 12 | | Interest cost | | 428 | | | 416 | | | 396 | | | | | 30 | | | 24 | | | 28 | | Expected return on plan assets | | (343 | ) | | (402 | ) | | (387 | ) | | | | — | | | — | | | — | | Amortization of prior service cost | | 13 | | | 34 | | | 31 | | | | | (7 | ) | | (10 | ) | | (5 | ) | Amortization of actuarial losses (gains) | | 50 | | | 22 | | | 17 | | | | | (6 | ) | | (2 | ) | | (1 | ) | Asset ceiling | | 4 | | | 1 | | | — | | | | | — | | | — | | | — | | Curtailments | | (4 | ) | | (3 | ) | | (8 | ) | | | | (1 | ) | | — | | | — | | Settlements | | (1 | ) | | (2 | ) | | (12 | ) | | | | — | | | (3 | ) | | (1 | ) | Special termination benefits | | — | | | — | | | — | | | | | — | | | — | | | — | | Net periodic benefit cost (income) | | 281 | | | 209 | | | 197 | | | | | 26 | | | 23 | | | 33 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | Pension benefits | | | Other benefits | | For the year ended December 31, (M€) | | 2011 | | | 2010 | | | 2009 | | | 2011 | | | 2010 | | | 2009 | | Service cost | | | 163 | | | | 159 | | | | 134 | | | | 13 | | | | 11 | | | | 10 | | Interest cost | | | 420 | | | | 441 | | | | 428 | | | | 28 | | | | 29 | | | | 30 | | Expected return on plan assets | | | (385 | ) | | | (396 | ) | | | (343 | ) | | | — | | | | — | | | | — | | Amortization of prior service cost | | | 58 | | | | 74 | | | | 13 | | | | 2 | | | | (5 | ) | | | (7 | ) | Amortization of actuarial losses (gains) | | | 46 | | | | 66 | | | | 50 | | | | — | | | | (4 | ) | | | (6 | ) | Asset ceiling | | | 2 | | | | (3 | ) | | | 4 | | | | — | | | | — | | | | — | | Curtailments | | | (22 | ) | | | (3 | ) | | | (4 | ) | | | (1 | ) | | | (3 | ) | | | (1 | ) | Settlements | | | (9 | ) | | | 7 | | | | (1 | ) | | | — | | | | — | | | | — | | Special termination benefits | | | — | | | | — | | | | — | | | | — | | | | 1 | | | | — | | Net periodic benefit cost (income) | | | 273 | | | | 345 | | | | 281 | | | | 42 | | | | 29 | | | | 26 | |
A positive or negative change of one-percentage-point in the healthcare inflation rate would have the following approximate impact: | | | | | | (€ million) | | 1% point increase | | 1% point decrease | | Benefit obligation as of December 31, 2009 | | 60 | | (47 | ) | 2009 net periodic benefit cost (income) | | 7 | | (3 | ) |
| | | | | | | | | (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,(€ million) | | 2009 | | 2008 | | 2007 | | As of December 31, (M€) | | | 2011 | | | 2010 | | | 2009 | | Litigations and accrued penalty claims | | 423 | | 546 | | 601 | | | 572 | | | | 485 | | | | 423 | | Provisions for environmental contingencies | | 623 | | 558 | | 552 | | | 600 | | | | 644 | | | | 623 | | Asset retirement obligations | | 5,469 | | 4,500 | | 4,206 | | | 6,884 | | | | 5,917 | | | | 5,469 | | Other non-current provisions | | 1,331 | | 1,804 | | 1,188 | | | 1,099 | | | | 1,116 | | | | 1,331 | | Other non-current liabilities | | 1,535 | | 450 | | 296 | | | 1,754 | | | | 936 | | | | 1,535 | | Total | | 9,381 | | 7,858 | | 6,843 | | | 10,909 | | | | 9,098 | | | | 9,381 | |
In 2011, litigation reserves mainly include a provision covering risks concerning antitrust investigations related to Arkema amounting to€17 million as of December 31, 2011. Other risks and commitments that give rise to contingent liabilities are described in Note 32 to the Consolidated Financial Statements. In 2011, other non-current provisions mainly include: The contingency reserve related to the Toulouse-AZF plant explosion (civil liability) for€21 million as of December 31, 2011; Provisions related to restructuring activities in the Downstream and Chemicals segments for€211 million as of December 31, 2011; and The contingency reserve related to the Buncefield depot explosion (civil liability) for€80 million as of December 31, 2011. In 2011, other non-current liabilities mainly include debts (whose maturity is more than one year) related to fixed assets acquisitions. This heading is mainly composed of a€991 million debt related to the acquisition of an interest in the liquids-rich area of the Utica shale play (see Note 3 to the Consolidated Financial Statements). In 2010, litigation reserves mainly included a provision covering risks concerning antitrust investigations related to Arkema amounting to€17 million as of December 31, 2010. Other risks and commitments that give rise to contingent liabilities are described in Note 32 to the Consolidated Financial Statements. In 2010, other non-current provisions mainly included: The contingency reserve related to the Toulouse-AZF plant explosion (civil liability) for€31 million as of December 31, 2010; Provisions related to restructuring activities in the Downstream and Chemicals segments for€261 million as of December 31, 2010; and The contingency reserve related to the Buncefield depot explosion (civil liability) for€194 million as of December 31, 2010. In 2010, other non-current liabilities mainly included debts (whose maturity is more than one year) related to fixed assets acquisitions. In 2009, litigation reserves mainly includeincluded a provision covering risks concerning antitrust investigations related to Arkema amounting to€43 million as of December 31, 2009. Other risks and commitments that give rise to contingent liabilities are described in Note 32 to the Consolidated Financial Statements. In 2009, other non currentnon-current provisions mainly include: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 currentnon-current liabilities mainly includeincluded debts (whose maturity is more than one year) related to fixed assets acquisitions. This heading iswas mainly composed of a€818 million debt related to Chesapeake acquisition (see Note 3 to the Consolidated Financial Statements). In 2008, litigation reserves mainly included a provision covering risks concerning antitrust investigations related to Arkema amounting to€85 million as of December 31, 2008. Other risks and commitments that give rise to contingent liabilities are described in Note 32 to the Consolidated Financial Statements.
In 2008, other non current provisions mainly included the contingency reserve related to the Toulouse-AZF plant explosion (civil liability) for€256 million as of December 31, 2008.
In 2007, litigation reserves mainly included a provision covering risks concerning antitrust investigations related to Arkema amounting to€138 million as of December 31, 2007. Other risks and commitments that give rise to contingent liabilities are described in Note 32 to the Consolidated Financial Statements.
In 2007, other non-current provisions mainly included:
The contingency reserve related to the Toulouse-AZF plant explosion (civil liability) for€134 million as of December 31, 2007; and
Provisions related to restructuring activities in the Chemicals segment for€49 million as of December 31, 2007.
Changes in provisions and other non-current liabilities | | | | | | | | | | | | | | | (€ million) | | As of January 1, | | Allowances | | Reversals | | | Currency translation adjustment | | | Other | | As of December 31, | 2009 | | 7,858 | | 1,254 | | (1,413 | ) | | 202 | | | 1,480 | | 9,381 | 2008 | | 6,843 | | 1,424 | | (864 | ) | | (460 | ) | | 915 | | 7,858 | 2007 | | 6,467 | | 747 | | (927 | ) | | (303 | ) | | 859 | | 6,843 |
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 include: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 2008, allowances2011, reversals of the period (€1,424798 million) are mainly included:related to the following incurred expenses: AssetProvisions for asset retirement obligations for€229 million (accretion);189 million;
Environmental contingencies written back for€70 million; The contingency reserve related to the Toulouse-AZF plant explosion (civil liability), written back for€14010 million; Environmental contingenciesThe contingency reserve related to the Buncefield depot explosion (civil liability), written back for€89116 million;
An allowance of€48 million for litigation reserves in connection with antitrust investigations, as described in Note 32 to the Consolidated Financial Statements “Other risks and contingent liabilities”; and
Provisions related tofor restructuring of activitiesand social plans written back for€27164 million. In 2007, allowances2010, reversals of the period (€747971 million) were mainly included:related to the following incurred expenses: Provisions for asset retirement obligations for€189 million (accretion);214 million; An allowance of€10026 million for litigation reserves in connection with antitrust investigations, as described in Note 32 to the Consolidated Financial Statements “Other risks and contingent liabilities”;investigations;
Environmental contingencies in the Chemicals segmentwritten back for€2366 million; The contingency reserve related to the Toulouse-AZF plant explosion (civil liability), written back for€9 million; The contingency reserve related to the Buncefield depot explosion (civil liability), written back for€190 million; and Provisions related tofor restructuring of activitiesand social plans written back for€1560 million. Reversals
In 2009, reversals of the period (€1,413 million) were mainly relaterelated to the following incurred expenses: Provisions for asset retirement obligations for€191 million; €52 million for litigation reserves in connection with antitrust investigations; Environmental contingencies written back for€86 million; The contingency reserve related to the Toulouse-AZF plant explosion (civil liability), written back for€216 million; The contingency reserve related to the Buncefield depot explosion (civil liability), written back for€375 million; and Provisions for restructuring and social plans written back for€28 million. In 2008, reversals of the period (€864 million) were mainly related to the following incurred expenses:
Provisions for asset retirement obligations for€280 million;
€163 million for litigation reserves in connection with antitrust investigations;
Environmental contingencies written back for€96 million;
The contingency reserve related to the Toulouse-AZF plant explosion (civil liability), written back for€18 million; and
Provisions for restructuring and social plans written back for€10 million.
In 2007, reversals of the period (€927 million) were mainly related to the following incurred expenses:
Provisions for asset retirement obligations for€209 million;
Environmental contingencies in the Chemicals segment written back for€52 million;
The contingency reserve related to the Toulouse-AZF plant explosion (civil liability), written back for€42 million; and
Provisions for restructuring and social plans written back for€37 million.
CHANGES IN THE ASSET RETIREMENT OBLIGATIONChanges in the asset retirement obligation
Changes in the asset retirement obligation are as follows: | | | | | | | | | | | | | | | | | | | | (€ million) | | As of January 1, | | Accretion | | Revision in estimates | | New obligations | | Spending on existing obligations | | | Currency translation adjustment | | | Other | | | As of December 31, | 2009 | | 4,500 | | 283 | | 447 | | 179 | | (191 | ) | | 232 | | | 19 | | | 5,469 | 2008 | | 4,206 | | 229 | | 563 | | 188 | | (280 | ) | | (414 | ) | | 8 | | | 4,500 | 2007 | | 3,893 | | 189 | | 203 | | 371 | | (209 | ) | | (206 | ) | | (35 | ) | | 4,206 |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | (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, 2009(€ million) | | | | | | | | | (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, net of hedging instruments | | — | | 17,584 | | | 17,584 | | 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) | | NON-CURRENT FINANCIAL DEBT AND RELATED FINANCIAL INSTRUMENTS |
| | | | | | | | | As of December 31, 2008(€ million) | | | | | | | | | (Assets)/Liabilities | | Secured | | Unsecured | | | Total | | | | | | Non-current financial debt | | 895 | | 15,296 | | | 16,191 | | of which hedging instruments of non-current financial debt (liabilities) | | — | | 440 | | | 440 | | Hedging instruments of non-current financial debt (assets)(a) | | — | | (892 | ) | | (892 | ) | Non-current financial debt – net of hedging instruments | | 895 | | 14,404 | | | 15,299 | | Bonds, 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 | |
| As of December 31, 2007(€ million) | | | | | | (Assets)/Liabilities | | Secured | | Unsecured | | Total | | | | As of December 31, 2011 (M€) (Assets) / Liabilities | | | Secured | | | Unsecured | | Total | | Non-current financial debt | | 772 | | 14,104 | | | 14,876 | | | | 349 | | | | 22,208 | | | | 22,557 | | of which hedging instruments of non-current financial debt (liabilities) | | — | | 369 | | | 369 | | | | — | | | | 146 | | | | 146 | | Hedging instruments of non-current financial debt (assets)(a) | | — | | (460 | ) | | (460 | ) | | | — | | | | (1,976 | ) | | | (1,976 | ) | Non-current financial debt – net of hedging instruments | | 772 | | 13,644 | | | 14,416 | | | Bonds, net of hedging instruments | | — | | 11,650 | | | 11,650 | | | 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 | | 453 | | 1,781 | | | 2,234 | | | | 129 | | | | 446 | | | | 575 | | Bank and other, fixed rate | | 2 | | 213 | | | 215 | | | | 76 | | | | 206 | | | | 282 | | Financial lease obligations | | 317 | | — | | | 317 | | | | 144 | | | | 8 | | | | 152 | | Non-current financial debt – net of hedging instruments | | 772 | | 13,644 | | | 14,416 | | | Non-current financial debt — net of hedging instruments | | | | 349 | | | | 20,232 | | | | 20,581 | |
(a) | See the description of these hedging instruments in Notes 1 paragraph M(iii) “Long-term financing”, 28 and 29 to the Consolidated Financial Statements. |
| | | | | | | | | | | | | As of December 31, 2010 (M€) (Assets) / Liabilities | | Secured | | | Unsecured | | | Total | | Non-current financial debt | | | 287 | | | | 20,496 | | | | 20,783 | | of which hedging instruments of non-current financial debt (liabilities) | | | — | | | | 178 | | | | 178 | | Hedging instruments of non-current financial debt (assets)(a) | | | — | | | | (1,870 | ) | | | (1,870 | ) | Non-current financial debt — net of hedging instruments | | | 287 | | | | 18,626 | | | | 18,913 | | Bonds after fair value hedge | | | — | | | | 15,491 | | | | 15,491 | | Fixed rate bonds and bonds after cash flow hedge | | | — | | | | 2,836 | | | | 2,836 | | Bank and other, floating rate | | | 47 | | | | 189 | | | | 236 | | Bank and other, fixed rate | | | 65 | | | | 110 | | | | 175 | | Financial lease obligations | | | 175 | | | | — | | | | 175 | | Non-current financial debt — net of hedging instruments | | | 287 | | | | 18,626 | | | | 18,913 | |
(a) | See the description of these hedging instruments in Notes 1 paragraph M(iii) “Long-term financing”, 28 and 29 to the Consolidated Financial Statements. |
| | | | | | | | | | | | | As of December 31, 2009 (M€) (Assets) / Liabilities | | Secured | | | Unsecured | | | Total | | Non-current financial debt | | | 312 | | | | 19,125 | | | | 19,437 | | of which hedging instruments of non-current financial debt (liabilities) | | | — | | | | 241 | | | | 241 | | Hedging instruments of non-current financial debt (assets)(a) | | | — | | | | (1,025 | ) | | | (1,025 | ) | Non-current financial debt — net of hedging instruments | | | 312 | | | | 18,100 | | | | 18,412 | | Bonds after fair value hedge | | | — | | | | 15,884 | | | | 15,884 | | Fixed rate bonds and bonds after cash flow hedge | | | — | | | | 1,700 | | | | 1,700 | | Bank and other, floating rate | | | 60 | | | | 379 | | | | 439 | | Bank and other, fixed rate | | | 50 | | | | 79 | | | | 129 | | Financial lease obligations | | | 202 | | | | 58 | | | | 260 | | Non-current financial debt — net of hedging instruments | | | 312 | | | | 18,100 | | | | 18,412 | |
(a) | See the description of these hedging instruments in Notes 1 paragraph M(iii) “Long-term financing”, 28 and 29 to the Consolidated Financial Statements. |
Fair value of bonds, as of December 31, 2009,2011, after taking into account currency and interest rates swaps, is detailed as follows: | | | | | Fair value after hedging as of | | | | | | | | (€ million) | | Year of issue | | December 31, 2009 | | December 31, 2008 | | December 31, 2007 | | 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 | | | FRF | | 2008 | | 6.750% | | Bond | | 1997 | | — | | | 124 | | | 118 | | | FRF | | 2009 | | 6.200% | | Bond | | 1998 | | — | | | — | | | 26 | | | FRF | | 2008 | | Pibor 3 months + 0.380% | | Bond | | 1998 | | — | | | 119 | | | 113 | | | FRF | | 2009 | | 5.125% | | Bond | | 1998 | | 116 | | | 121 | | | 114 | | | FRF | | 2013 | | 5.000% | | | 1998 | | | | 129 | | | | 125 | | | | 116 | | | | FRF | | | | 2013 | | | 5.000% | Bond | | 2000 | | 61 | | | 63 | | | 60 | | | EUR | | 2010 | | 5.650% | | | 2000 | | | | — | | | | — | | | | 61 | | | | EUR | | | | 2010 | | | 5.650% | Current portion (less than one year) | | | | (61 | ) | | (243 | ) | | (349 | ) | | | | | | | | | | | — | | | | — | | | | (61 | ) | | | | | | Total parent company | | 116 | | | 184 | | | 406 | | | | | | | 129 | | | | 125 | | | | 116 | | | | | | | Elf Aquitaine SA | | | | | | | | | | | | | | | | Bond | | 1999 | | — | | | 1,003 | | | 998 | | | EUR | | 2009 | | 4.500% | | Current portion (less than one year) | | — | | | (1,003 | ) | | — | | | | Total Elf Aquitaine SA | | — | | | — | | | 998 | | | | TOTAL CAPITAL(a) | | | | | | | | | | | | | | | | Bond | | 2002 | | 14 | | | 14 | | | 14 | | | USD | | 2012 | | 5.890% | | Bond | | 2003 | | — | | | — | | | 39 | | | AUD | | 2008 | | 5.000% | | Bond | | 2003 | | — | | | — | | | 41 | | | AUD | | 2008 | | 5.000% | | Bond | | 2003 | | — | | | — | | | 44 | | | CAD | | 2008 | | 4.250% | | Bond | | 2003 | | — | | | — | | | 148 | | | CHF | | 2008 | | 2.010% | | Bond | | 2003 | | — | | | — | | | 98 | | | CHF | | 2008 | | 2.010% | | Bond | | 2003 | | — | | | — | | | 360 | | | EUR | | 2008 | | 3.500% | | Bond | | 2003 | | — | | | — | | | 72 | | | EUR | | 2008 | | 3.500% | | Bond | | 2003 | | — | | | — | | | 113 | | | EUR | | 2008 | | 3.500% | | Bond | | 2003 | | — | | | — | | | 170 | | | USD | | 2008 | | 3.250% | | Bond | | 2003 | | — | | | 52 | | | 49 | | | AUD | | 2009 | | 6.250% | | Bond | | 2003 | | — | | | 154 | | | 145 | | | CHF | | 2009 | | 2.385% | | Bond | | 2003 | | 160 | | | 166 | | | 157 | | | CHF | | 2010 | | 2.385% | | Bond | | 2003 | | 21 | | | 22 | | | 20 | | | USD | | 2013 | | 4.500% | | Bond | | 2003-2004 | | — | | | 395 | | | 373 | | | USD | | 2009 | | 3.500% | | Bond | | 2004 | | — | | | — | | | 34 | | | USD | | 2008 | | 3.250% | | Bond | | 2004 | | — | | | — | | | 34 | | | USD | | 2008 | | 3.250% | | Bond | | 2004 | | — | | | — | | | 68 | | | USD | | 2008 | | 3.250% | | Bond | | 2004 | | — | | | 57 | | | 54 | | | AUD | | 2009 | | 6.000% | | Bond | | 2004 | | — | | | 28 | | | 26 | | | AUD | | 2009 | | 6.000% | | Bond | | 2004 | | 53 | | | 55 | | | 52 | | | CAD | | 2010 | | 4.000% | | Bond | | 2004 | | 113 | | | 117 | | | 110 | | | CHF | | 2010 | | 2.385% | | Bond | | 2004 | | 438 | | | 454 | | | 429 | | | EUR | | 2010 | | 3.750% | | Bond | | 2004 | | 322 | | | 334 | | | 316 | | | GBP | | 2010 | | 4.875% | | Bond | | 2004 | | 128 | | | 132 | | | 125 | | | GBP | | 2010 | | 4.875% | | Bond | | 2004 | | 185 | | | 191 | | | 181 | | | GBP | | 2010 | | 4.875% | | Bond | | 2004 | | 53 | | | 55 | | | 52 | | | AUD | | 2011 | | 5.750% | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | Bonds after fair value hedge (M€) | | Year of issue | | | Fair value after hedging as of December 31, 2011 | | | Fair value after hedging as of December 31, 2010 | | | Fair value after hedging as of December 31, 2009 | | | Currency | | | Maturity | | | Initial rate before hedging instruments | TOTAL CAPITAL(a) | | | | | | | | | | | | | | | | | | | | | | | | | | | Bond | | | 2002 | | | | 15 | | | | 15 | | | | 14 | | | | USD | | | | 2012 | | | 5.890% | Bond | | | 2003 | | | | — | | | | — | | | | 160 | | | | CHF | | | | 2010 | | | 2.385% | Bond | | | 2003 | | | | 23 | | | | 22 | | | | 21 | | | | USD | | | | 2013 | | | 4.500% | Bond | | | 2004 | | | | — | | | | — | | | | 53 | | | | CAD | | | | 2010 | | | 4.000% | Bond | | | 2004 | | | | — | | | | — | | | | 113 | | | | CHF | | | | 2010 | | | 2.385% | Bond | | | 2004 | | | | — | | | | — | | | | 438 | | | | EUR | | | | 2010 | | | 3.750% | Bond | | | 2004 | | | | — | | | | — | | | | 322 | | | | GBP | | | | 2010 | | | 4.875% | Bond | | | 2004 | | | | — | | | | — | | | | 128 | | | | GBP | | | | 2010 | | | 4.875% | Bond | | | 2004 | | | | — | | | | — | | | | 185 | | | | GBP | | | | 2010 | | | 4.875% | Bond | | | 2004 | | | | — | | | | 57 | | | | 53 | | | | AUD | | | | 2011 | | | 5.750% | Bond | | | 2004 | | | | — | | | | 116 | | | | 107 | | | | CAD | | | | 2011 | | | 4.875% |
| | | Fair value after hedging as of | | | (€ million) | | Year of issue | | December 31, 2009 | | December 31, 2008 | | December 31, 2007 | | 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 | | 107 | | 111 | | 105 | | CAD | | 2011 | | 4.875% | | | 2004 | | | | — | | | | 235 | | | | 203 | | | | USD | | | | 2011 | | | 4.125% | Bond | | 2004 | | 203 | | 216 | | 204 | | USD | | 2011 | | 4.125% | | | 2004 | | | | — | | | | 75 | | | | 69 | | | | USD | | | | 2011 | | | 4.125% | Bond | | 2004 | | 69 | | 72 | | 68 | | USD | | 2011 | | 4.125% | | | 2004 | | | | 129 | | | | 125 | | | | 116 | | | | CHF | | | | 2012 | | | 2.375% | Bond | | 2004 | | 116 | | 120 | | 114 | | CHF | | 2012 | | 2.375% | | | 2004 | | | | 52 | | | | 51 | | | | 47 | | | | NZD | | | | 2014 | | | 6.750% | Bond | | 2004 | | 47 | | 49 | | 46 | | NZD | | 2014 | | 6.750% | | | 2005 | | | | — | | | | 57 | | | | 53 | | | | AUD | | | | 2011 | | | 5.750% | Bond | | 2005 | | — | | 36 | | 34 | | USD | | 2009 | | 3.500% | | | 2005 | | | | — | | | | 60 | | | | 56 | | | | CAD | | | | 2011 | | | 4.000% | Bond | | 2005 | | 53 | | 55 | | 52 | | AUD | | 2011 | | 5.750% | | | 2005 | | | | — | | | | 120 | | | | 112 | | | | CHF | | | | 2011 | | | 1.625% | Bond | | 2005 | | 56 | | 58 | | 55 | | CAD | | 2011 | | 4.000% | | | 2005 | | | | — | | | | 226 | | | | 226 | | | | CHF | | | | 2011 | | | 1.625% | Bond | | 2005 | | 112 | | 116 | | 109 | | CHF | | 2011 | | 1.625% | | | 2005 | | | | — | | | | 139 | | | | 144 | | | | USD | | | | 2011 | | | 4.125% | Bond | | 2005 | | 226 | | 226 | | 226 | | CHF | | 2011 | | 1.625% | | | 2005 | | | | 63 | | | | 63 | | | | 63 | | | | AUD | | | | 2012 | | | 5.750% | Bond | | 2005 | | 144 | | 144 | | 136 | | USD | | 2011 | | 4.125% | | | 2005 | | | | 200 | | | | 194 | | | | 180 | | | | CHF | | | | 2012 | | | 2.135% | Bond | | 2005 | | 63 | | 63 | | 63 | | AUD | | 2012 | | 5.750% | | | 2005 | | | | 65 | | | | 65 | | | | 65 | | | | CHF | | | | 2012 | | | 2.135% | Bond | | 2005 | | 180 | | 187 | | 177 | | CHF | | 2012 | | 2.135% | | | 2005 | | | | 97 | | | | 97 | | | | 97 | | | | CHF | | | | 2012 | | | 2.375% | Bond | | 2005 | | 65 | | 65 | | 65 | | CHF | | 2012 | | 2.135% | | | 2005 | | | | 404 | | | | 391 | | | | 363 | | | | EUR | | | | 2012 | | | 3.250% | Bond | | 2005 | | 97 | | 98 | | 97 | | CHF | | 2012 | | 2.375% | | | 2005 | | | | 57 | | | | 57 | | | | 57 | | | | NZD | | | | 2012 | | | 6.500% | Bond | | 2005 | | 363 | | 376 | | 356 | | EUR | | 2012 | | 3.250% | | | 2006 | | | | — | | | | — | | | | 75 | | | | GBP | | | | 2010 | | | 4.875% | Bond | | 2005 | | 292 | | 287 | | 286 | | GBP | | 2012 | | 4.625% | | | 2006 | | | | — | | | | — | | | | 50 | | | | EUR | | | | 2010 | | | 3.750% | Bond | | 2005 | | 57 | | 57 | | 57 | | NZD | | 2012 | | 6.500% | | | 2006 | | | | — | | | | — | | | | 50 | | | | EUR | | | | 2010 | | | 3.750% | Bond | | 2006 | | 75 | | 75 | | 75 | | GBP | | 2010 | | 4.875% | | | 2006 | | | | — | | | | — | | | | 100 | | | | EUR | | | | 2010 | | | 3.750% | Bond | | 2006 | | 50 | | 50 | | 50 | | EUR | | 2010 | | 3.750% | | | 2006 | | | | — | | | | 42 | | | | 42 | | | | EUR | | | | 2011 | | | EURIBOR
3 months +0.040% | Bond | | 2006 | | 50 | | 50 | | 50 | | EUR | | 2010 | | 3.750% | | | 2006 | | | | — | | | | 300 | | | | 300 | | | | EUR | | | | 2011 | | | 3.875% | Bond | | 2006 | | 100 | | 102 | | 100 | | EUR | | 2010 | | 3.750% | | | 2006 | | | | — | | | | 150 | | | | 150 | | | | EUR | | | | 2011 | | | 3.875% | Bond | | 2006 | | 42 | | 42 | | 42 | | EUR | | 2011 | | EURIBOR 3 months +0.040% | | | 2006 | | | | — | | | | 300 | | | | 300 | | | | EUR | | | | 2011 | | | 3.875% | Bond | | 2006 | | 300 | | 300 | | 300 | | EUR | | 2011 | | 3.875% | | | 2006 | | | | — | | | | 120 | | | | 120 | | | | USD | | | | 2011 | | | 5.000% | Bond | | 2006 | | 150 | | 150 | | 150 | | EUR | | 2011 | | 3.875% | | | 2006 | | | | — | | | | 300 | | | | 300 | | | | EUR | | | | 2011 | | | 3.875% | Bond | | 2006 | | 300 | | 300 | | 300 | | EUR | | 2011 | | 3.875% | | | 2006 | | | | — | | | | 472 | | | | 472 | | | | USD | | | | 2011 | | | 5.000% | Bond | | 2006 | | 120 | | 120 | | 120 | | USD | | 2011 | | 5.000% | | | 2006 | | | | 62 | | | | 62 | | | | 62 | | | | AUD | | | | 2012 | | | 5.625% | Bond | | 2006 | | 300 | | 300 | | 300 | | EUR | | 2011 | | 3.875% | | | 2006 | | | | 72 | | | | 72 | | | | 72 | | | | CAD | | | | 2012 | | | 4.125% | Bond | | 2006 | | 472 | | 473 | | 474 | | USD | | 2011 | | 5.000% | | | 2006 | | | | 100 | | | | 100 | | | | 100 | | | | EUR | | | | 2012 | | | 3.250% | Bond | | 2006 | | 62 | | 62 | | 62 | | AUD | | 2012 | | 5.625% | | | 2006 | | | | 74 | | | | 74 | | | | 74 | | | | GBP | | | | 2012 | | | 4.625% | Bond | | 2006 | | 72 | | 72 | | 72 | | CAD | | 2012 | | 4.125% | | | 2006 | | | | 100 | | | | 100 | | | | 100 | | | | EUR | | | | 2012 | | | 3.250% | Bond | | 2006 | | 100 | | 100 | | 100 | | EUR | | 2012 | | 3.250% | | | 2006 | | | | 125 | | | | 125 | | | | 125 | | | | CHF | | | | 2013 | | | 2.510% | Bond | | 2006 | | 74 | | 74 | | 74 | | GBP | | 2012 | | 4.625% | | | 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 | | 125 | | 125 | | 126 | | CHF | | 2013 | | 2.510% | | | 2006 | | | | 65 | | | | 65 | | | | 65 | | | | CHF | | | | 2016 | | | 2.385% | Bond | | 2006 | | 127 | | 127 | | 127 | | CHF | | 2014 | | 2.635% | | | 2006 | | | | 64 | | | | 64 | | | | 64 | | | | CHF | | | | 2016 | | | 2.385% | Bond | | 2006 | | 130 | | 130 | | 130 | | CHF | | 2016 | | 2.385% | | | 2006 | | | | 63 | | | | 63 | | | | 63 | | | | CHF | | | | 2016 | | | 2.385% | Bond | | 2006 | | 65 | | 65 | | 65 | | CHF | | 2016 | | 2.385% | | | 2006 | | | | 129 | | | | 129 | | | | 129 | | | | CHF | | | | 2018 | | | 3.135% | Bond | | 2006 | | 64 | | 64 | | 64 | | CHF | | 2016 | | 2.385% | | | 2007 | | | | — | | | | — | | | | 60 | | | | CHF | | | | 2010 | | | 2.385% | Bond | | 2006 | | 63 | | 64 | | 64 | | CHF | | 2016 | | 2.385% | | | 2007 | | | | — | | | | — | | | | 74 | | | | GBP | | | | 2010 | | | 4.875% | Bond | | 2006 | | 129 | | 129 | | 129 | | CHF | | 2018 | | 3.135% | | | 2007 | | | | — | | | | 77 | | | | 77 | | | | USD | | | | 2011 | | | 5.000% | Bond | | 2007 | | 60 | | 60 | | 60 | | CHF | | 2010 | | 2.385% | | | 2007 | | | | 370 | | | | 370 | | | | 370 | | | | USD | | | | 2012 | | | 5.000% | Bond | | 2007 | | 74 | | 74 | | 74 | | GBP | | 2010 | | 4.875% | | | 2007 | | | | 222 | | | | 222 | | | | 222 | | | | USD | | | | 2012 | | | 5.000% | Bond | | 2007 | | 77 | | 77 | | 77 | | USD | | 2011 | | 5.000% | | | 2007 | | | | 61 | | | | 61 | | | | 61 | | | | AUD | | | | 2012 | | | 6.500% | Bond | | 2007 | | 370 | | 370 | | 371 | | USD | | 2012 | | 5.000% | | | 2007 | | | | 72 | | | | 72 | | | | 72 | | | | CAD | | | | 2012 | | | 4.125% | Bond | | 2007 | | 222 | | 222 | | 222 | | USD | | 2012 | | 5.000% | | | 2007 | | | | 71 | | | | 71 | | | | 71 | | | | GBP | | | | 2012 | | | 4.625% | Bond | | 2007 | | 61 | | 61 | | 61 | | AUD | | 2012 | | 6.500% | | | 2007 | | | | 300 | | | | 300 | | | | 300 | | | | EUR | | | | 2013 | | | 4.125% | Bond | | 2007 | | 72 | | 72 | | 72 | | CAD | | 2012 | | 4.125% | | | 2007 | | | | 73 | | | | 73 | | | | 73 | | | | GBP | | | | 2013 | | | 5.500% | Bond | | 2007 | | 71 | | 71 | | 71 | | GBP | | 2012 | | 4.625% | | | 2007 | | | | 306 | | | | 306 | | | | 306 | | | | GBP | | | | 2013 | | | 5.500% | Bond | | 2007 | | 300 | | 300 | | 301 | | EUR | | 2013 | | 4.125% | | | 2007 | | | | 72 | | | | 72 | | | | 72 | | | | GBP | | | | 2013 | | | 5.500% | Bond | | 2007 | | 73 | | 74 | | 73 | | GBP | | 2013 | | 5.500% | | | 2007 | | | | 248 | | | | 248 | | | | 248 | | | | CHF | | | | 2014 | | | 2.635% | Bond | | | | 2007 | | | | 31 | | | | 31 | | | | 31 | | | | JPY | | | | 2014 | | | 1.505% | Bond | | | | 2007 | | | | 61 | | | | 61 | | | | 61 | | | | CHF | | | | 2014 | | | 2.635% | Bond | | | | 2007 | | | | 49 | | | | 49 | | | | 49 | | | | JPY | | | | 2014 | | | 1.723% | Bond | | | | 2007 | | | | 121 | | | | 121 | | | | 121 | | | | CHF | | | | 2015 | | | 3.125% | Bond | | | | 2007 | | | | 300 | | | | 300 | | | | 300 | | | | EUR | | | | 2017 | | | 4.700% | Bond | | | | 2007 | | | | 76 | | | | 76 | | | | 76 | | | | CHF | | | | 2018 | | | 3.135% |
| | | | | | | | | | | | | | | | | December 31, | | | | December 31, | | | | December 31, | | | | December 31, | | | | December 31, | | | | December 31, | | | December 31, | | | Fair value after hedging as of | | | (€ million) | | Year of issue | | December 31, 2009 | | December 31, 2008 | | December 31, 2007 | | 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 | | 2007 | | 306 | | 306 | | 305 | | GBP | | 2013 | | 5.500% | | | 2007 | | | | 60 | | | | 60 | | | | 60 | | | | CHF | | | | 2018 | | | 3.135% | Bond | | 2007 | | 72 | | 73 | | 74 | | GBP | | 2013 | | 5.500% | | | 2008 | | | | — | | | | — | | | | 63 | | | | GBP | | | | 2010 | | | 4.875% | Bond | | 2007 | | 248 | | 248 | | 248 | | CHF | | 2014 | | 2.635% | | | 2008 | | | | — | | | | — | | | | 66 | | | | GBP | | | | 2010 | | | 4.875% | Bond | | 2007 | | 31 | | 31 | | 31 | | JPY | | 2014 | | 1.505% | | | 2008 | | | | — | | | | 92 | | | | 92 | | | | AUD | | | | 2011 | | | 7.500% | Bond | | 2007 | | 61 | | 61 | | 61 | | CHF | | 2014 | | 2.635% | | | 2008 | | | | — | | | | 100 | | | | 100 | | | | EUR | | | | 2011 | | | 3.875% | Bond | | 2007 | | 49 | | 49 | | 49 | | JPY | | 2014 | | 1.723% | | | 2008 | | | | — | | | | 150 | | | | 150 | | | | EUR | | | | 2011 | | | 3.875% | Bond | | 2007 | | 121 | | 121 | | 122 | | CHF | | 2015 | | 3.125% | | | 2008 | | | | — | | | | 50 | | | | 50 | | | | EUR | | | | 2011 | | | 3.875% | Bond | | 2007 | | 300 | | 300 | | 302 | | EUR | | 2017 | | 4.700% | | | 2008 | | | | — | | | | 50 | | | | 50 | | | | EUR | | | | 2011 | | | 3.875% | Bond | | 2007 | | 76 | | 76 | | 76 | | CHF | | 2018 | | 3.135% | | | 2008 | | | | — | | | | 60 | | | | 60 | | | | JPY | | | | 2011 | | | EURIBOR 6 months + 0.018% | Bond | | 2007 | | 60 | | 60 | | 60 | | CHF | | 2018 | | 3.135% | | | 2008 | | | | — | | | | 102 | | | | 102 | | | | USD | | | | 2011 | | | 3.750% | Bond | | 2008 | | 63 | | 63 | | — | | GBP | | 2010 | | 4.875% | | | 2008 | | | | 62 | | | | 62 | | | | 62 | | | | CHF | | | | 2012 | | | 2.135% | Bond | | 2008 | | 66 | | 66 | | — | | GBP | | 2010 | | 4.875% | | | 2008 | | | | 124 | | | | 124 | | | | 124 | | | | CHF | | | | 2012 | | | 3.635% | Bond | | 2008 | | 92 | | 92 | | — | | AUD | | 2011 | | 7.500% | | | 2008 | | | | 46 | | | | 46 | | | | 46 | | | | CHF | | | | 2012 | | | 2.385% | Bond | | 2008 | | 100 | | 100 | | — | | EUR | | 2011 | | 3.875% | | | 2008 | | | | 92 | | | | 92 | | | | 92 | | | | CHF | | | | 2012 | | | 2.385% | Bond | | 2008 | | 150 | | 151 | | — | | EUR | | 2011 | | 3.875% | | | 2008 | | | | 64 | | | | 64 | | | | 64 | | | | CHF | | | | 2012 | | | 2.385% | Bond | | 2008 | | 50 | | 50 | | — | | EUR | | 2011 | | 3.875% | | | 2008 | | | | 50 | | | | 50 | | | | 50 | | | | EUR | | | | 2012 | | | 3.250% | Bond | | 2008 | | 50 | | 50 | | — | | EUR | | 2011 | | 3.875% | | | 2008 | | | | 63 | | | | 63 | | | | 63 | | | | GBP | | | | 2012 | | | 4.625% | Bond | | 2008 | | 60 | | 60 | | — | | JPY | | 2011 | | EURIBOR 6 months + 0.018% | | | 2008 | | | | 63 | | | | 63 | | | | 63 | | | | GBP | | | | 2012 | | | 4.625% | Bond | | 2008 | | 102 | | 102 | | — | | USD | | 2011 | | 3.750% | | | 2008 | | | | 63 | | | | 63 | | | | 63 | | | | GBP | | | | 2012 | | | 4.625% | Bond | | 2008 | | 62 | | 62 | | — | | CHF | | 2012 | | 2.135% | | | 2008 | | | | 62 | | | | 62 | | | | 62 | | | | NOK | | | | 2012 | | | 6.000% | Bond | | 2008 | | 124 | | 124 | | — | | CHF | | 2012 | | 3.635% | | | 2008 | | | | 69 | | | | 69 | | | | 69 | | | | USD | | | | 2012 | | | 5.000% | Bond | | 2008 | | 46 | | 46 | | — | | CHF | | 2012 | | 2.385% | | | 2008 | | | | 60 | | | | 60 | | | | 60 | | | | AUD | | | | 2013 | | | 7.500% | Bond | | 2008 | | 92 | | 92 | | — | | CHF | | 2012 | | 2.385% | | | 2008 | | | | 61 | | | | 61 | | | | 61 | | | | AUD | | | | 2013 | | | 7.500% | Bond | | 2008 | | 64 | | 64 | | — | | CHF | | 2012 | | 2.385% | | | 2008 | | | | 128 | | | | 127 | | | | 127 | | | | CHF | | | | 2013 | | | 3.135% | Bond | | 2008 | | 50 | | 50 | | — | | EUR | | 2012 | | 3.250% | | | 2008 | | | | 62 | | | | 62 | | | | 62 | | | | CHF | | | | 2013 | | | 3.135% | Bond | | 2008 | | 63 | | 63 | | — | | GBP | | 2012 | | 4.625% | | | 2008 | | | | 200 | | | | 200 | | | | 200 | | | | EUR | | | | 2013 | | | 4.125% | Bond | | 2008 | | 63 | | 63 | | — | | GBP | | 2012 | | 4.625% | | | 2008 | | | | 100 | | | | 100 | | | | 100 | | | | EUR | | | | 2013 | | | 4.125% | Bond | | 2008 | | 63 | | 64 | | — | | GBP | | 2012 | | 4.625% | | | 2008 | | | | 1,000 | | | | 1,000 | | | | 1,000 | | | | EUR | | | | 2013 | | | 4.750% | Bond | | 2008 | | 62 | | 62 | | — | | NOK | | 2012 | | 6.000% | | | 2008 | | | | 63 | | | | 63 | | | | 63 | | | | GBP | | | | 2013 | | | 5.500% | Bond | | 2008 | | 69 | | 69 | | — | | USD | | 2012 | | 5.000% | | | 2008 | | | | 149 | | | | 149 | | | | 149 | | | | JPY | | | | 2013 | | | EURIBOR 6 months + 0.008% | Bond | | 2008 | | 60 | | 60 | | — | | AUD | | 2013 | | 7.500% | | | 2008 | | | | 191 | | | | 191 | | | | 191 | | | | USD | | �� | | 2013 | | | 4.000% | Bond | | 2008 | | 61 | | 61 | | — | | AUD | | 2013 | | 7.500% | | | 2008 | | | | 61 | | | | 61 | | | | 61 | | | | CHF | | | | 2015 | | | 3.135% | Bond | | 2008 | | 127 | | 128 | | — | | CHF | | 2013 | | 3.135% | | | 2008 | | | | 62 | | | | 62 | | | | 62 | | | | CHF | | | | 2015 | | | 3.135% | Bond | | 2008 | | 62 | | 63 | | — | | CHF | | 2013 | | 3.135% | | | 2008 | | | | 61 | | | | 61 | | | | 61 | | | | CHF | | | | 2015 | | | 3.135% | Bond | | 2008 | | 200 | | 200 | | — | | EUR | | 2013 | | 4.125% | | | 2008 | | | | 62 | | | | 62 | | | | 62 | | | | CHF | | | | 2018 | | | 3.135% | Bond | | 2008 | | 100 | | 100 | | — | | EUR | | 2013 | | 4.125% | | | 2009 | | | | 56 | | | | 56 | | | | 56 | | | | AUD | | | | 2013 | | | 5.500% | Bond | | 2008 | | 1,000 | | 1,002 | | — | | EUR | | 2013 | | 4.750% | | | 2009 | | | | 54 | | | | 54 | | | | 54 | | | | AUD | | | | 2013 | | | 5.500% | Bond | | 2008 | | 63 | | 63 | | — | | GBP | | 2013 | | 5.500% | | | 2009 | | | | 236 | | | | 236 | | | | 236 | | | | CHF | | | | 2013 | | | 2.500% | Bond | | 2008 | | 149 | | 149 | | — | | JPY | | 2013 | | EURIBOR 6 months + 0.008% | | | 2009 | | | | 77 | | | | 77 | | | | 77 | | | | USD | | | | 2013 | | | 4.000% | Bond | | 2008 | | 191 | | 194 | | — | | USD | | 2013 | | 4.000% | | | 2009 | | | | 131 | | | | 131 | | | | 131 | | | | CHF | | | | 2014 | | | 2.625% | Bond | | 2008 | | 61 | | 61 | | — | | CHF | | 2015 | | 3.135% | | | 2009 | | | | 998 | | | | 997 | | | | 998 | | | | EUR | | | | 2014 | | | 3.500% | Bond | | 2008 | | 62 | | 62 | | — | | CHF | | 2015 | | 3.135% | | | 2009 | | | | 150 | | | | 150 | | | | 150 | | | | EUR | | | | 2014 | | | 3.500% | Bond | | 2008 | | 61 | | 62 | | — | | CHF | | 2015 | | 3.135% | | | 2009 | | | | 40 | | | | 40 | | | | 40 | | | | HKD | | | | 2014 | | | 3.240% | Bond | | 2008 | | 62 | | 62 | | — | | CHF | | 2018 | | 3.135% | | | 2009 | | | | 107 | | | | 103 | | | | 96 | | | | AUD | | | | 2015 | | | 6.000% | Bond | | 2009 | | 56 | | — | | — | | AUD | | 2013 | | 5.500% | | | 2009 | | | | 550 | | | | 550 | | | | 550 | | | | EUR | | | | 2015 | | | 3.625% | Bond | | 2009 | | 54 | | — | | — | | AUD | | 2013 | | 5.500% | | | 2009 | | | | 684 | | | | 684 | | | | 684 | | | | USD | | | | 2015 | | | 3.125% | Bond | | 2009 | | 236 | | — | | — | | CHF | | 2013 | | 2.500% | | | 2009 | | | | 232 | | | | 224 | | | | 208 | | | | USD | | | | 2015 | | | 3.125% | Bond | | 2009 | | 77 | | — | | — | | USD | | 2013 | | 4.000% | | | 2009 | | | | 99 | | | | 99 | | | | 99 | | | | CHF | | | | 2016 | | | 2.385% | Bond | | 2009 | | 131 | | — | | — | | CHF | | 2014 | | 2.625% | | | 2009 | | | | 115 | | | | 115 | | | | 115 | | | | GBP | | | | 2017 | | | 4.250% | Bond | | 2009 | | 998 | | — | | — | | EUR | | 2014 | | 3.500% | | | 2009 | | | | 225 | | | | 225 | | | | 225 | | | | GBP | | | | 2017 | | | 4.250% | Bond | | 2009 | | 150 | | — | | — | | EUR | | 2014 | | 3.500% | | | 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 | | | | | | | | (€ million) | | Year of issue | | December 31, 2009 | | December 31, 2008 | | December 31, 2007 | | Currency | | Maturity | | Initial rate before hedging instruments | | Bond | | 2009 | | 40 | | | — | | | — | | | HKD | | 2014 | | 3.240% | | Bond | | 2009 | | 96 | | | — | | | — | | | AUD | | 2015 | | 6.000% | | 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 | | 2009 | | 550 | | | — | | | — | | | EUR | | 2015 | | 3.625% | | | 2010 | | | | 111 | | | | 108 | | | | — | | | | CAD | | | | 2014 | | | 2.500% | Bond | | 2009 | | 684 | | | — | | | — | | | USD | | 2015 | | 3.125% | | | 2010 | | | | 54 | | | | 53 | | | | — | | | | NZD | | | | 2014 | | | 4.750% | Bond | | 2009 | | 208 | | | — | | | — | | | USD | | 2015 | | 3.125% | | | 2010 | | | | 193 | | | | 187 | | | | — | | | | USD | | | | 2015 | | | 2.875% | Bond | | 2009 | | 99 | | | — | | | — | | | CHF | | 2016 | | 2.385% | | | 2010 | | | | 966 | | | | 935 | | | | — | | | | USD | | | | 2015 | | | 3.000% | Bond | | 2009 | | 115 | | | — | | | — | | | GBP | | 2017 | | 4.250% | | | 2010 | | | | 70 | | | | 68 | | | | — | | | | AUD | | | | 2015 | | | 6.000% | Bond | | 2009 | | 225 | | | — | | | — | | | GBP | | 2017 | | 4.250% | | | 2010 | | | | 71 | | | | 69 | | | | — | | | | AUD | | | | 2015 | | | 6.000% | Bond | | 2009 | | 448 | | | — | | | — | | | EUR | | 2019 | | 4.875% | | | 2010 | | | | 64 | | | | 64 | | | | — | | | | AUD | | | | 2015 | | | 6.000% | Bond | | 2009 | | 602 | | | — | | | — | | | EUR | | 2019 | | 4.875% | | | 2010 | | | | 773 | | | | 748 | | | | — | | | | USD | | | | 2016 | | | 2.300% | Bond | | 2009 | | 69 | | | — | | | — | | | HKD | | 2019 | | 4.180% | | | 2010 | | | | 491 | | | | 476 | | | | — | | | | EUR | | | | 2022 | | | 3.125% | Bond | | 2009 | | 347 | | | — | | | — | | | USD | | 2021 | | 4.250% | | | 2011 | | | | 116 | | | | — | | | | — | | | | USD | | | | 2016 | | | 6.500% | Bond | | 2009 | | 806 | | | — | | | — | | | EUR | | 2024 | | 5.125% | | | 2011 | | | | 597 | | | | — | | | | — | | | | USD | | | | 2018 | | | 3.875% | Current portion (less than one year) | | (1,937 | ) | | (722 | ) | | (1,222 | ) | | | | | | (2 992 | ) | | | (3 450 | ) | | | (1,937 | ) | | | | | | Total TOTAL CAPITAL(a) | | 17,315 | | | 13,380 | | | 10,136 | | | | | | | | | | | | | | | | | | | | 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 | | 153 | | | 103 | | | 110 | | | | | | | 308 | | | | 223 | | | | 153 | | | | | | | | Total | | 17,584 | | | 13,667 | | | 11,650 | | | | Total bonds after fair value hedge | | | | | | 15,148 | | | | 15,491 | | | | 15,884 | | | | | | |
| | | December 31, | | | | December 31, | | | | December 31, | | | | December 31, | | | | December 31, | | | | December 31, | | | | December 31, | | Bonds after cash flow hedge and fix rate bonds (€ million) | | Year of issue | | | Amount after hedging as of December 31, 2011 | | | Amount after hedging as of December 31, 2010 | | | Amount after hedging as of December 31, 2009 | | | Currency | | | Maturity | | | Initial rate before hedging instruments | | TOTAL CAPITAL(a) | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Bond | | | 2005 | | | | 294 | | | | 293 | | | | 292 | | | | GBP | | | | 2012 | | | | 4.625 | % | Bond | | | 2009 | | | | 744 | | | | 691 | | | | 602 | | | | EUR | | | | 2019 | | | | 4.875 | % | Bond | | | 2009 | | | | 386 | | | | — | | | | — | | | | USD | | | | 2021 | | | | 4.250 | % | Bond | | | 2009 | | | | 1,016 | | | | 917 | | | | 806 | | | | EUR | | | | 2024 | | | | 5.125 | % | Bond | | | 2010 | | | | 966 | | | | 935 | | | | — | | | | USD | | | | 2020 | | | | 4.450 | % | Bond | | | 2011 | | | | 386 | | | | — | | | | — | | | | USD | | | | 2021 | | | | 4.125 | % | Current portion (less than one year) | | | | | | | (294 | ) | | | — | | | | — | | | | | | | | | | | | | | Total TOTAL CAPITAL | | | | | | | 3,498 | | | | 2,836 | | | | 1,700 | | | | | | | | | | | | | | Other consolidated subsidiaries(d) | | | | | | | 926 | | | | — | | | | — | | | | | | | | | | | | | | Total Bonds after cash flow hedge | | | | | | | 4,424 | | | | 2,836 | | | | 1,700 | | | | | | | | | | | | | |
(a) | TOTAL CAPITAL is a wholly-owned indirect subsidiary of TOTAL S.A. (with the exception of one share held by each member of its Board of Directors). It acts as a financing vehicle for the Group. Its debt securities are fully and unconditionally guaranteed by TOTAL S.A. as to payment of principal, premium, if any, interest and any other amounts due. |
(b) | TOTAL CAPITAL CANADA Ltd. is a wholly-owned direct subsidiary of TOTAL S.A. It acts as a financing vehicle for the activities of the Group in Canada. Its debt securities are fully and unconditionally guaranteed by TOTAL S.A. as to payment of principal, premium, if any, interest and any other amounts due. |
(c) | TOTAL CAPITAL INTERNATIONAL is a wholly-owned direct subsidiary of TOTAL S.A. It acts as a financing vehicle for the Group. Its debt securities are fully and unconditionally guaranteed by TOTAL S.A. as to payment of principal, premium, if any, interest and any other amounts due. |
(d) | This amount includes SunPower’s convertible bonds for an amount of€355 million. |
Loan repayment schedule (excluding current portion) | | | | | | | | | | | | As of December 31, 2009 (€ million) | | 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% |
| | | | | | | | | | | | As of December 31, 2008 (€ million) | | 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 (€ million) | | 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, 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,(€ million) | | 2009 | | % | | 2008 | | % | | 2007 | | % | | As of December 31, (M€) | | | 2011 | | | % | | | 2010 | | | % | | | 2009 | | | % | | U.S. Dollar | | 3,962 | | 21% | | 3,990 | | 26% | | 4,700 | | 33% | | | 8,645 | | | | 42% | | | | 7,248 | | | | 39% | | | | 3,962 | | | | 21% | | Euro | | 14,110 | | 77% | | 10,685 | | 70% | | 8,067 | | 56% | | | 9,582 | | | | 47% | | | | 11,417 | | | | 60% | | | | 14,110 | | | | 77% | | Other currencies | | 340 | | 2% | | 624 | | 4% | | 1,649 | | 11% | | | 2,354 | | | | 11% | | | | 248 | | | | 1% | | | | 340 | | | | 2% | | Total | | 18,412 | | 100% | | 15,299 | | 100% | | 14,416 | | 100% | | | 20,581 | | | | 100% | | | | 18,913 | | | | 100% | | | | 18,412 | | | | 100% | |
| As of December 31,(€ million) | | 2009 | | % | | 2008 | | % | | 2007 | | % | | As of December 31, (M€) | | | 2011 | | | % | | | 2010 | | | % | | | 2009 | | | % | | Fixed rate | | 2,064 | | 11% | | 633 | | 4% | | 893 | | 6% | | | 4,854 | | | | 24% | | | | 3,177 | | | | 17% | | | | 2,064 | | | | 11% | | Floating rate | | 16,348 | | 89% | | 14,666 | | 96% | | 13,523 | | 94% | | | 15,727 | | | | 76% | | | | 15,736 | | | | 83% | | | | 16,348 | | | | 89% | | Total | | 18,412 | | 100% | | 15,299 | | 100% | | 14,416 | | 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,(€ million) | | | | | | | | As of December 31, (M€) | | | 2011 | | 2010 | | 2009 | | (Assets) / Liabilities | | 2009 | | 2008 | | 2007 | | | | | | | | Current financial debt(a) | | 4,761 | | | 5,586 | | | 2,530 | | | | 5,819 | | | | 5,867 | | | | 4,761 | | Current portion of non-current financial debt | | 2,233 | | | 2,136 | | | 2,083 | | | | 3,856 | | | | 3,786 | | | | 2,233 | | Current borrowings | | 6,994 | | | 7,722 | | | 4,613 | | | Current borrowings(note 28) | | | | 9,675 | | | | 9,653 | | | | 6,994 | | Current portion of hedging instruments of debt (liabilities) | | 97 | | | 12 | | | 1 | | | | 40 | | | | 12 | | | | 97 | | Other current financial instruments (liabilities) | | 26 | | | 146 | | | 59 | | | | 127 | | | | 147 | | | | 26 | | Other current financial liabilities(note 28) | | 123 | | | 158 | | | 60 | | | | 167 | | | | 159 | | | | 123 | | Current deposits beyond three months | | (55 | ) | | (1 | ) | | (850 | ) | | | (101 | ) | | | (869 | ) | | | (55 | ) | Current portion of hedging instruments of debt (assets) | | (197 | ) | | (100 | ) | | (388 | ) | | | (383 | ) | | | (292 | ) | | | (197 | ) | Other current financial instruments (assets) | | (59 | ) | | (86 | ) | | (26 | ) | | | (216 | ) | | | (44 | ) | | | (59 | ) | Current financial assets(note 28) | | (311 | ) | | (187 | ) | | (1,264 | ) | | | (700 | ) | | | (1,205 | ) | | | (311 | ) | Current borrowings and related financial assets and liabilities, net | | 6,806 | | | 7,693 | | | 3,409 | | | | 9,142 | | | | 8,607 | | | | 6,806 | |
(a) | As of December 31, 2011 and as of December 31, 2010, the current financial debt includes a commercial paper program in Total Capital Canada Ltd. Total Capital Canada Ltd. is a wholly-owned direct subsidiary of TOTAL S.A. It acts as a financing vehicle for the activities of the Group in Canada. Its debt securities are fully and unconditionally guaranteed by TOTAL S.A. as to payment of principal, premium, if any, interest and any other amounts due. |
C) NET-DEBT-TO-EQUITY RATIO
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, 20092011 is calculated after distributionpayment of a dividend of€2.28 per share, of which€1.14 per share was paidsubject to approval by the shareholders’ meeting on November 19, 2009.May 11, 2012. The net-debt-to-equity ratio is calculated as follows: | As of December 31,(€ million) | | | | | | | | As of December 31, (M€) | | | 2011 | | 2010 | | 2009 | | (Assets) / Liabilities | | 2009 | | 2008 | | 2007 | | | | | | | | Current borrowings | | 6,994 | | | 7,722 | | | 4,613 | | | | 9,675 | | | | 9,653 | | | | 6,994 | | Other current financial liabilities | | 123 | | | 158 | | | 60 | | | | 167 | | | | 159 | | | | 123 | | Current financial assets | | (311 | ) | | (187 | ) | | (1,264 | ) | | | (700 | ) | | | (1,205 | ) | | | (311 | ) | Non-current financial debt | | 19,437 | | | 16,191 | | | 14,876 | | | | 22,557 | | | | 20,783 | | | | 19,437 | | Hedging instruments on non-current financial debt | | (1,025 | ) | | (892 | ) | | (460 | ) | | | (1,976 | ) | | | (1,870 | ) | | | (1,025 | ) | Cash and cash equivalents | | (11,662 | ) | | (12,321 | ) | | (5,988 | ) | | | (14,025 | ) | | | (14,489 | ) | | | (11,662 | ) | Net financial debt | | 13,556 | | | 10,671 | | | 11,837 | | | | 15,698 | | | | 13,031 | | | | 13,556 | | Shareholders’ equity - Group share | | 52,552 | | | 48,992 | | | 44,858 | | | Estimated dividend payable | | (2,546 | ) | | (2,540 | ) | | (2,397 | ) | | Minority interest | | 987 | | | 958 | | | 842 | | | Total shareholder’s equity | | 50,993 | | | 47,410 | | | 43,303 | | | 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 | | 26.6% | | | 22.5% | | | 27.3% | | | | 23.0% | | | | 22.2% | | | | 26.6% | |
21)OTHER CREDITORS AND ACCRUED LIABILITIES | As of December 31,(€ million) | | 2009 | | 2008 | | 2007 | | As of December 31, (M€) | | | 2011 | | | 2010 | | | 2009 | | Accruals and deferred income | | 223 | | 151 | | 137 | | | 231 | | | | 184 | | | | 223 | | Payable to States (including taxes and duties) | | 6,024 | | 6,256 | | 7,860 | | | 8,040 | | | | 7,235 | | | | 6,024 | | Payroll | | 955 | | 928 | | 909 | | | 1,062 | | | | 996 | | | | 955 | | Other operating liabilities | | 4,706 | | 4,297 | | 3,900 | | | 5,441 | | | | 3,574 | | | | 4,706 | | Total | | 11,908 | | 11,632 | | 12,806 | | | 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 includesincluded€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, 2009(€ million) | | Operating leases | | Finance leases | | 2010 | | 523 | | 42 | | 2011 | | 377 | | 43 | | 2012 | | 299 | | 42 | | 2013 | | 243 | | 41 | | 2014 | | 203 | | 39 | | 2015 and beyond | | 894 | | 128 | | Total minimum payments | | 2,539 | | 335 | | Less financial expenses | | — | | (53 | ) | Nominal value of contracts | | — | | 282 | | Less current portion of finance lease contracts | | — | | (22 | ) | Outstanding liability of finance lease contracts | | — | | 260 | |
| | | | | | | | | For the year ended December 31, 2008(€ million) | | Operating leases | | Finance leases | | 2009 | | 429 | | 47 | | 2010 | | 306 | | 42 | | 2011 | | 243 | | 42 | | 2012 | | 208 | | 42 | | 2013 | | 166 | | 40 | | 2014 and beyond | | 675 | | 148 | | Total minimum payments | | 2,027 | | 361 | | Less financial expenses | | — | | (70 | ) | Nominal value of contracts | | — | | 291 | | Less current portion of finance lease contracts | | — | | (23 | ) | Outstanding liability of finance lease contracts | | — | | 268 | |
| | | | | | | | | For the year ended December 31, 2011 (M€) | | Operating leases | | | Finance leases | | 2012 | | | 762 | | | | 41 | | 2013 | | | 552 | | | | 40 | | 2014 | | | 416 | | | | 37 | | 2015 | | | 335 | | | | 36 | | 2016 | | | 316 | | | | 34 | | 2017 and beyond | | | 940 | | | | 20 | | Total minimum payments | | | 3,321 | | | | 208 | | Less financial expenses | | | — | | | | (31 | ) | Nominal value of contracts | | | — | | | | 177 | | Less current portion of finance lease contracts | | | — | | | | (25 | ) | Outstanding liability of finance lease contracts | | | — | | | | 152 | |
| | | | | | | | | For the year ended December 31, 2010 (M€) | | Operating leases | | | Finance leases | | 2011 | | | 582 | | | | 39 | | 2012 | | | 422 | | | | 39 | | 2013 | | | 335 | | | | 39 | |
| | | | | | For the year ended December 31, 2007(€ million) | | 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 | | 2014 | | | 274 | | | | 35 | | 2015 | | | 230 | | | | 35 | | 2016 and beyond | | | 1,105 | | | | 54 | | Total minimum payments | | | 2,948 | | | | 241 | | Less financial expenses | | | — | | | | (43 | ) | Nominal value of contracts | | | — | | | | 198 | | Less current portion of finance lease contracts | | | — | | | | (23 | ) | Outstanding liability of finance lease contracts | | | — | | | | 175 | |
| | | | | | | | | For the year ended December 31, 2009 (M€) | | Operating leases | | | Finance leases | | 2010 | | | 523 | | | | 42 | | 2011 | | | 377 | | | | 43 | | 2012 | | | 299 | | | | 42 | | 2013 | | | 243 | | | | 41 | | 2014 | | | 203 | | | | 39 | | 2015 and beyond | | | 894 | | | | 128 | | Total minimum payments | | | 2,539 | | | | 335 | | Less financial expenses | | | — | | | | (53 | ) | Nominal value of contracts | | | — | | | | 282 | | Less current portion of finance lease contracts | | | — | | | | (22 | ) | Outstanding liability of finance lease contracts | | | — | | | | 260 | |
Net rental expense incurred under operating leases for the year ended December 31, 20092011 is€645 million (against€605 million in 2010 and€613 million (against€426 million in 2008 and€383 million in 2007)2009). 23)COMMITMENTS AND CONTINGENCIES | | | Maturity and installments | | Maturity and installments | | As of December 31, 2009(€ million) | | 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) | | 18,152 | | — | | 12,443 | | 5,709 | | | 20,429 | | | | — | | | | 13,121 | | | | 7,308 | | Current portion of non-current debt obligations net of hedging instruments(Note 20) | | 2,111 | | 2,111 | | — | | — | | | 3,488 | | | | 3,488 | | | | — | | | | — | | Finance lease obligations(Note 22) | | 282 | | 22 | | 146 | | 114 | | | 177 | | | | 25 | | | | 134 | | | | 18 | | Asset retirement obligations(Note 19) | | 5,469 | | 235 | | 972 | | 4,262 | | | 6,884 | | | | 272 | | | | 804 | | | | 5,808 | | Contractual obligations recorded in the balance sheet | | 26,014 | | 2,368 | | 13,561 | | 10,085 | | | 30,978 | | | | 3,785 | | | | 14,059 | | | | 13,134 | | Operating lease obligations(Note 22) | | 2,539 | | 523 | | 1,122 | | 894 | | | 3,321 | | | | 762 | | | | 1,619 | | | | 940 | | Purchase obligations | | 49,808 | | 4,542 | | 9,919 | | 35,347 | | | 77,353 | | | | 11,049 | | | | 20,534 | | | | 45,770 | | Contractual obligations not recorded in the balance sheet | | 52,347 | | 5,065 | | 11,041 | | 36,241 | | | 80,674 | | | | 11,811 | | | | 22,153 | | | | 46,710 | | Total of contractual obligations | | 78,361 | | 7,433 | | 24,602 | | 46,326 | | | 111,652 | | | | 15,596 | | | | 36,212 | | | | 59,844 | | Guarantees given for excise taxes | | 1,765 | | 1,617 | | 69 | | 79 | | | 1,765 | | | | 1,594 | | | | 73 | | | | 98 | | Guarantees given against borrowings | | 2,882 | | 1,383 | | 709 | | 790 | | | 4,778 | | | | 3,501 | | | | 323 | | | | 954 | | Indemnities related to sales of businesses | | 36 | | — | | 1 | | 35 | | | 39 | | | | — | | | | 34 | | | | 5 | | Guarantees of current liabilities | | 203 | | 160 | | 38 | | 5 | | | 376 | | | | 262 | | | | 35 | | | | 79 | | Guarantees to customers / suppliers | | 2,770 | | 1,917 | | 70 | | 783 | | | 3,265 | | | | 1,634 | | | | 57 | | | | 1,574 | | Letters of credit | | 1,499 | | 1,485 | | 2 | | 12 | | | 2,408 | | | | 1,898 | | | | 301 | | | | 209 | | Other operating commitments | | 765 | | 582 | | 103 | | 80 | | | 2,477 | | | | 433 | | | | 697 | | | | 1,347 | | Total of other commitments given | | 9,920 | | 7,144 | | 992 | | 1,784 | | | 15,108 | | | | 9,322 | | | | 1,520 | | | | 4,266 | | Mortgages and liens received | | 330 | | 5 | | 106 | | 219 | | | 408 | | | | 7 | | | | 119 | | | | 282 | | Goods and services sale obligations(a) | | | | 62,216 | | | | 4,221 | | | | 17,161 | | | | 40,834 | | Other commitments received | | 5,637 | | 3,187 | | 481 | | 1,969 | | | 6,740 | | | | 4,415 | | | | 757 | | | | 1,568 | | Total of commitments received | | 5,967 | | 3,192 | | 587 | | 2,188 | | | 69,364 | | | | 8,643 | | | | 18,037 | | | | 42,684 | |
| | | | | | | | | | | Maturity and installments | As of December 31, 2008(€ million) | | 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 | Current portion of non-current debt obligations net of hedging instruments(Note 20) | | 2,025 | | 2,025 | | — | | — | Finance lease obligations(Note 22) | | 291 | | 23 | | 142 | | 126 | Asset retirement obligations(Note 19) | | 4,500 | | 154 | | 653 | | 3,693 | Contractual obligations recorded in the balance sheet | | 21,847 | | 2,202 | | 13,859 | | 5,786 | Operating lease obligations(Note 22) | | 2,027 | | 429 | | 923 | | 675 | Purchase obligations | | 60,226 | | 4,420 | | 13,127 | | 42,679 | Contractual obligations not recorded in the balance sheet | | 62,253 | | 4,849 | | 14,050 | | 43,354 | Total of contractual obligations | | 84,100 | | 7,051 | | 27,909 | | 49,140 | Guarantees given for excise taxes | | 1,720 | | 1,590 | | 58 | | 72 | Guarantees given against borrowings | | 2,870 | | 1,119 | | 519 | | 1,232 | Indemnities related to sales of businesses | | 39 | | 3 | | 1 | | 35 | Guarantees of current liabilities | | 315 | | 119 | | 164 | | 32 | Guarantees to customers / suppliers | | 2,866 | | 68 | | 148 | | 2,650 | Letters of credit | | 1,080 | | 1,024 | | 17 | | 39 | Other operating commitments | | 648 | | 246 | | 132 | | 270 | Total of other commitments given | | 9,538 | | 4,169 | | 1,039 | | 4,330 | Mortgages and liens received | | 321 | | 72 | | 110 | | 139 | Other commitments received | | 4,218 | | 2,440 | | 234 | | 1,544 | Total of commitments received | | 4,539 | | 2,512 | | 344 | | 1,683 |
(a) | As from December 31, 2011, the Group discloses its goods and services sale obligations. |
| | | Maturity and installments | | Maturity and installments | | As of December 31, 2007(€ million) | | 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) | | 14,099 | | — | | 11,251 | | 2,848 | | | 18,738 | | | | — | | | | 12,392 | | | | 6,346 | | Current portion of non-current debt obligations net of hedging instruments(Note 20) | | 1,669 | | 1,669 | | — | | — | | | 3,483 | | | | 3,483 | | | | — | | | | — | | Finance lease obligations(Note 22) | | 343 | | 26 | | 173 | | 144 | | | 198 | | | | 23 | | | | 129 | | | | 46 | | Asset retirement obligations(Note 19) | | 4,206 | | 189 | | 503 | | 3,514 | | | 5,917 | | | | 177 | | | | 872 | | | | 4,868 | | Contractual obligations recorded in the balance sheet | | 20,317 | | 1,884 | | 11,927 | | 6,506 | | | 28,336 | | | | 3,683 | | | | 13,393 | | | | 11,260 | | Operating lease obligations(Note 22) | | 1,921 | | 427 | | 1,002 | | 492 | | | 2,948 | | | | 582 | | | | 1,261 | | | | 1,105 | | Purchase obligations | | 61,794 | | 3,210 | | 15,419 | | 43,165 | | | 61,293 | | | | 6,347 | | | | 14,427 | | | | 40,519 | | Contractual obligations not recorded in the balance sheet | | 63,715 | | 3,637 | | 16,421 | | 43,657 | | | 64,241 | | | | 6,929 | | | | 15,688 | | | | 41,624 | | Total of contractual obligations | | 84,032 | | 5,521 | | 28,348 | | 50,163 | | | 92,577 | | | | 10,612 | | | | 29,081 | | | | 52,884 | | Guarantees given for excise taxes | | 1,796 | | 590 | | 58 | | 1,148 | | | 1,753 | | | | 1,594 | | | | 71 | | | | 88 | | Guarantees given against borrowings | | 781 | | 9 | | 624 | | 148 | | | 5,005 | | | | 1,333 | | | | 493 | | | | 3,179 | | Indemnities related to sales of businesses | | 40 | | — | | 3 | | 37 | | | 37 | | | | — | | | | 31 | | | | 6 | | Guarantees of current liabilities | | 97 | | 16 | | 48 | | 33 | | | 171 | | | | 147 | | | | 19 | | | | 5 | | Guarantees to customers / suppliers | | 1,197 | | 23 | | 6 | | 1,168 | | | 3,020 | | | | 1,621 | | | | 96 | | | | 1,303 | | Letters of credit | | 1,677 | | 1,677 | | — | | — | | | 1,250 | | | | 1,247 | | | | — | | | | 3 | | Other operating commitments | | 1,280 | | 207 | | 151 | | 922 | | | 2,057 | | | | 467 | | | | 220 | | | | 1,370 | | Total of other commitments given | | 6,868 | | 2,522 | | 890 | | 3,456 | | | 13,293 | | | | 6,409 | | | | 930 | | | | 5,954 | | Mortgages and liens received | | 353 | | 7 | | 69 | | 277 | | | 429 | | | | 2 | | | | 114 | | | | 313 | | Other commitments received | | 3,887 | | 2,781 | | 377 | | 729 | | | 6,387 | | | | 3,878 | | | | 679 | | | | 1,830 | | Total of commitments received | | 4,240 | | 2,788 | | 446 | | 1,006 | | | 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 swaps hedging bonds, and excludes non-current finance lease obligations of€260152 million. The current portion of non-current debt is included in the items “Current borrowings”, “Current financial assets” and “Other current financial liabilities” of the Consolidated Balance Sheet. It includes the current portion of swaps hedging bonds, and excludes the current portion of finance lease obligations of€2225 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 subsidiaries and equity affiliates. Maturity dates vary, and guarantees will terminate on payment and/or cancellation of the obligation. A payment would be triggered by failure of the guaranteed party to fulfill its obligation covered by the guarantee, and no assets are held as collateral for these guarantees. As of December 31, 2009,2011, the maturities of these guarantees are up to 2023. Guarantees given against borrowings include the guarantee given in 2008 by TOTAL S.A. in connection with the financing of the Yemen LNG project for an amount of€1,208 million. In turn, certain partners involved in this project have given commitments that could, in the case of Total S.A.’s guarantees being called for the maximum amount, reduce the Group’s exposure by up to€404 million, recorded under “Other commitments received”. In 2010, TOTAL S.A. provided guarantees in connection with the financing of the Jubail project (operated by SAUDI ARAMCO TOTAL Refining and Petrochemical Company (SATORP)) of up to€2,463 million, proportional to TOTAL’s share in the project (37.5%). In addition, TOTAL S.A. provided in 2010 a guarantee in favor of its partner in the Jubail project (Saudi Arabian Oil Company) with respect to Total Refining Saudi Arabia SAS’s obligations under the shareholders agreement with respect to SATORP. As of December 31, 2011, this guarantee is of up to€1,095 million and has been recorded under “Other operating commitments”. Indemnities related to sales of businesses In the ordinary course of business, the Group executes contracts involving standard indemnities in oil industry and indemnities specific to transactions such as sales of businesses. These indemnities might include claims against any of the following: environmental, tax and shareholder matters, intellectual property rights, governmental regulations and employment-related matters, dealer, supplier, and other commercial contractual relationships. Performance under these indemnities would generally be triggered by a breach of terms of the contract or by a third party claim. The Group regularly evaluates the probability of having to incur costs associated with these indemnities. The guarantees related to antitrust investigations granted as part of the agreement relating to the spin-off of Arkema are described in Note 32 to the Consolidated Financial Statements. Other guarantees given Non-consolidated subsidiaries The Group also guarantees the current liabilities of certain non-consolidated subsidiaries. Performance under these guarantees would be triggered by a financial default of the entity. Operating agreements As part of normal ongoing business operations and consistent with generally and accepted recognized industry practices, the Group enters into numerous agreements with other parties. These commitments are often entered into for commercial purposes, for regulatory purposes or for other operating agreements. Goods and services sale obligations These amounts represent binding obligations under contractual agreements to sell goods or services, including in particular hydrocarbon unconditional sale contracts (except when an active, highly-liquid market exists and volumes are re-sold shortly after purchase). 24)RELATED PARTIES The main transactions and balances with related parties (principally non-consolidated subsidiaries and equity affiliates) are detailed as follows: | Balance sheet As of December 31,(€ million) | | 2009 | | 2008 | | 2007 | | As of December 31, (M€) | | | 2011 | | | 2010 | | | 2009 | | Balance sheet | | | | | | | | Receivables | | | | | | | | | | | | | Debtors and other debtors | | 293 | | 244 | | 277 | | | 585 | | | | 432 | | | | 293 | | Loans (excl. loans to equity affiliates) | | 438 | | 354 | | 378 | | | 331 | | | | 315 | | | | 438 | | Payables | | | | | | | | | | | | | Creditors and other creditors | | 386 | | 136 | | 460 | | | 724 | | | | 497 | | | | 386 | | Debts | | 42 | | 50 | | 28 | | | 31 | | | | 28 | | | | 42 | | Statement of income For the year ended December 31, (€ million) | | 2009 | | 2008 | | 2007 | | | | | For the year ended December 31, (M€) | | | 2011 | | | 2010 | | | 2009 | | Statement of income | | | | | | | | Sales | | 2,183 | | 3,082 | | 2,635 | | | 4,400 | | | | 3,194 | | | | 2,183 | | Purchases | | 2,958 | | 4,061 | | 3,274 | | | 5,508 | | | | 5,576 | | | | 2,958 | | Financial expense | | 1 | | — | | — | | | — | | | | 69 | | | | 1 | | Financial income | | 68 | | 114 | | 29 | | | 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, (€ million) | | 2009 | | 2008 | | 2007 | Number of people | | 27 | | 30 | | 30 | Direct or indirect compensation | | 19.4 | | 20.4 | | 19.9 | Share-based payments expense (IFRS 2)(a) | | 11.2 | | 16.6 | | 18.4 | Pension expenses(b) | | 10.6 | | 11.9 | | 12.2 |
| | | | | | | | | | | | | 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€96.6 million provisioned as of December 31, 2009, against€98.0 million as of December 31, 2008 and€102.9 million as of December 31, 2007. |
The compensation allocated to members of the Board of Directors for directors’ fees totaled€1.07 million in 2011 (€0.96 million in 2010 and€0.97 million in 2009). 25)SHARE-BASED PAYMENTS A. TOTAL SHARE SUBSCRIPTION OPTION PLANS
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | Plan 2003 | | | Plan 2004 | | | Plan 2005 | | | Plan 2006 | | | Plan 2007 | | | Plan 2008 | | | Plan 2009 | | | Total | | | Weighted Average Exercise Price | Date of the shareholders’ meeting | | May 17, 2001 | | | May 14, 2004 | | | May 14, 2004 | | | May 14, 2004 | | | May 11, 2007 | | | May 11, 2007 | | | May 11, 2007 | | | | | | | Date of the award(a) | | July 16, 2003 | | | July 20, 2004 | | | July 19, 2005 | | | July 18, 2006 | | | July 17, 2007 | | | October 9, 2008 | | | September 15, 2009 | | | | | | | 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 | | | | | | | Expiry date | | July 16, 2011 | | | July 20, 2012 | | | July 19, 2013 | | | July 18, 2014 | | | July 17, 2015 | | | October 9, 2016 | | | September 15, 2017 | | | | | | | Number of options(c) | | | | | | | | | | | | | | | | | | | | | | | | | | | Existing 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 | 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 December 31, 2009 | | 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 |
A. | | TOTAL SHARE SUBSCRIPTION OPTION PLANS |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 2003 Plan | | | 2004 Plan | | | 2005 Plan | | | 2006 Plan | | | 2007 Plan | | | 2008 Plan | | | 2009 Plan | | | 2010 Plan | | | 2011 Plan | | | Total | | | Weighted average exercise price | | Date of the shareholders’ meeting | | | 05/17/2001 | | | | 05/14/2004 | | | | 05/14/2004 | | | | 05/14/2004 | | | | 05/11/2007 | | | | 05/11/2007 | | | | 05/11/2007 | | | | 05/21/2010 | | | | 05/21/2010 | | | | | | | | | | Date of the award(a) | | | 07/16/2003 | | | | 07/20/2004 | | | | 07/19/2005 | | | | 07/18/2006 | | | | 07/17/2007 | | | | 10/09/2008 | | | | 09/15/2009 | | | | 09/14/2010 | | | | 09/14/2011 | | | | | | | | | | Exercise price until May 23, 2006 included(b) | | | 33.30 | | | | 39.85 | | | | 49.73 | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | | | | | | | Exercise price since May 24, 2006(b) | | | 32.84 | | | | 39.30 | | | | 49.04 | | | | 50.60 | | | | 60.10 | | | | 42.90 | | | | 39.90 | | | | 38.20 | | | | 33.00 | | | | | | | | | | Expiry date | | | 07/16/2011 | | | | 07/20/2012 | | | | 07/19/2013 | | | | 07/18/2014 | | | | 07/17/2015 | | | | 10/09/2016 | | | | 09/15/2017 | | | | 09/14/2018 | | | | 09/14/2019 | | | | | | | | | | Number of options(c) | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Existing options as of January 1, 2008 | | | 8,368,378 | | | | 13,197,236 | | | | 6,243,438 | | | | 5,711,060 | | | | 5,920,105 | | | | — | | | | — | | | | — | | | | — | | | | 39,440,217 | | | | 44.23 | | Granted | | | — | | | | — | | | | — | | | | — | | | | — | | | | 4,449,810 | | | | — | | | | ��� | | | | — | | | | 4,449,810 | | | | 42.90 | | Cancelled | | | (25,184 | ) | | | (118,140 | ) | | | (34,032 | ) | | | (53,304 | ) | | | (34,660 | ) | | | (6,000 | ) | | | — | | | | — | | | | — | | | | (271,320 | ) | | | 44.88 | | Exercised | | | (841,846 | ) | | | (311,919 | ) | | | (17,702 | ) | | | (6,700 | ) | | | — | | | | — | | | | — | | | | — | | | | — | | | | (1,178,167 | ) | | | 34.89 | | Existing options as of January 1, 2009 | | | 7,501,348 | | | | 12,767,177 | | | | 6,191,704 | | | | 5,651,056 | | | | 5,885,445 | | | | 4,443,810 | | | | — | | | | — | | | | — | | | | 42,440,540 | | | | 44.35 | | Granted | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | 4,387,620 | | | | — | | | | — | | | | 4,387,620 | | | | 39.90 | | Cancelled | | | (8,020 | ) | | | (18,387 | ) | | | (6,264 | ) | | | (5,370 | ) | | | (13,780 | ) | | | (2,180 | ) | | | (10,610 | ) | | | — | | | | — | | | | (64,611 | ) | | | 45.04 | | Exercised | | | (681,699 | ) | | | (253,081 | ) | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | (934,780 | ) | | | 34.59 | | Existing options as of January 1, 2010 | | | 6,811,629 | | | | 12,495,709 | | | | 6,185,440 | | | | 5,645,686 | | | | 5,871,665 | | | | 4,441,630 | | | | 4,377,010 | | | | — | | | | — | | | | 45,828,769 | | | | 44.12 | | Granted | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | 4,788,420 | | | | — | | | | 4,788,420 | | | | 38.20 | | Cancelled(d) | | | (1,420 | ) | | | (15,660 | ) | | | (6,584 | ) | | | (4,800 | ) | | | (5,220 | ) | | | (92,472 | ) | | | (4,040 | ) | | | (1,120 | ) | | | — | | | | (131,316 | ) | | | 43.50 | | Exercised | | | (1,075,765 | ) | | | (141,202 | ) | | | — | | | | — | | | | — | | | | — | | | | (1,080 | ) | | | — | | | | — | | | | (1,218,047 | ) | | | 33.60 | | Existing options as of January 1, 2011 | | | 5,734,444 | | | | 12,338,847 | | | | 6,178,856 | | | | 5,640,886 | | | | 5,866,445 | | | | 4,349,158 | | | | 4,371,890 | | | | 4,787,300 | | | | — | | | | 49,267,826 | | | | 43.80 | | Granted | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | 1,518,840 | | | | 1,518,840 | | | | 33.00 | | Cancelled(e) | | | (738,534 | ) | | | (28,208 | ) | | | (16,320 | ) | | | (17,380 | ) | | | (16,080 | ) | | | (13,260 | ) | | | (14,090 | ) | | | (85,217 | ) | | | (1,000 | ) | | | (930,089 | ) | | | 34.86 | | Exercised | | | (4,995,910 | ) | | | (216,115 | ) | | | — | | | | — | | | | — | | | | (200 | ) | | | — | | | | (2,040 | ) | | | (9,400 | ) | | | (5,223,665 | ) | | | 33.11 | | Existing options as of December 31, 2011 | | | — | | | | 12,094,524 | | | | 6,162,536 | | | | 5,623,506 | | | | 5,850,365 | | | | 4,335,698 | | | | 4,357,800 | | | | 4,700,043 | | | | 1,508,440 | | | | 44,632,912 | | | | 44.87 | |
(a) | The grant date corresponds tois the date of the Board of Directors meeting that awardedawarding the share subscription options, except for the options awardedgrant of October 9, 2008, decided by the Board of Directors at their meeting ofon September 9, 2008, and granted on October 9, 2008. |
(b) | Exercise price in euro. The exercise prices of TOTAL subscription shares of the plans in force at that date were multiplied by 0.25 to take into account the four-for-one stock split on May 18, 2006. Moreover, following the spin-off of Arkema, the exercise prices of TOTAL subscription shares of these plans were multiplied by an adjustment factor equal to 0.986147 with effecteffective as of May 24, 2006. |
(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. |
(d) | Out of 92,472 options awarded under the 2008 Plan that were canceled, 88,532 options were canceled due to the performance condition. The acquisition rate applicable to the subscription options that were subject to the performance condition of the 2008 Plan was 60%. |
(e) | Out of the 930,089 options canceled in 2011, 738,534 options that were not exercised expired due to the expiry of the 2003 subscription option Plan on July 16, 2011. |
The options,Options are exercisable, subject to a continuedcontinuous employment condition, are exercisable only after a 2-year period from the date of the Board meeting awarding the options and must be exercised withinexpire eight years fromafter this date. UnderlyingThe underlying shares may not be sold fortransferred during four years from the date of grant. For the options2007 to 2011 Plans, the 4-year transfer restriction period does not apply to employees of the 2007, 2008 and 2009 Plans, beneficiaries working for a non-French subsidiarysubsidiaries as of the date of the grant, date are authorized towho may transfer the underlying shares issued upon exercise of options starting after a 2-year period from the grant date.
The continued employment condition states that the terminationdate of the employment contract will result in the employee losing the right to exercise the options.grant.
2011 Plan For the 20092011 Plan, the Board of Directors decided that for each beneficiarygrantee other than the CEO of more than 25,000 stock options, one third ofChairman and Chief Executive Officer, the options in excess of this number finally awarded following the 2-year vesting period will be subjectfinally granted to atheir beneficiary provided that the performance condition. This condition is fulfilled. The performance condition states that the number of options finally granted is based on the average of the Return On Equity (ROE) of the Group. The average ROE is calculated by the Group from the consolidated balance sheet and statement of income of the Group for fiscal years 2011 and 2012. The acquisition rate: is equal to zero if the average ROE is less than or equal to 7%; varies on straight-line basis between 0% and 100% if the average ROE is more than 7% and less than 18%; and is equal to 100% if the average ROE is more than or equal to 18%. In addition, as part of the 2011 Plan, the Board of Directors decided that the number of share subscription options finally awarded to the Chairman and Chief Executive Officer will be subject to two performance conditions: For 50% of the share subscription options granted, the performance condition states that the number of options finally granted is based on the average ROE of the Group. The average ROE is calculated by the Group from the consolidated accountsbalance 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 TOTALTOTAL. 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 greatermore than 7% and less than 18%; and is equal to 100% if the average ROE is greatermore than or equal to 18%. Furthermore,In addition, the Board of Directors decided that, for the Chief Executive Officer, the number of share subscription options awarded to the CEO isfinally 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.Group as published by TOTAL. The average ROE is calculated based on the Group’s consolidated accounts published by TOTALbalance 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%. | | fiscal years 2009 and 2010. The acquisition rates equal to zero if the average ROE is less than or equal to 7%; varies on a straight-line basis between 0% and 100% if the average ROE is greater than 7% and less than 18%; and is equal to 100% if the average ROE is greater than or equal to 18%.
|
For the other 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 Return On Average Capital Employed (ROACE) of the Group.Group as published by TOTAL. The average ROACE is calculated based on the Group’s consolidated accounts published by TOTALbalance 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 greatermore than 6% and less than 15%; and is equal to 100% if the average ROACE is greatermore than or equal to 15%. ForDue to the 2007 and 2008 Plans, the Boardapplication of Directors decided that for each beneficiary of more than 25,000 stock options, one third of the options in excess of this number finally awarded following the 2-year vesting period will be subject to a performance condition. This condition states that the number of subscription options finally granted is based on the ROE of the Group. The ROE is calculated based on the consolidated accounts published by TOTAL for the fiscal year preceding the final grant. The acquisition rate:
is equal to zero if the ROE is less than or equal to 10%;
varies on a straight-line basis between 0% and 80% if the ROE is greater than 10% and less than 18%;
varies on a straight-line basis between 80% and 100% if the ROE is greater than or equal to 18% and less than 30%; and
is equal to 100% if the ROE is greater than or equal to 30%.
For the 2007 Plan, the acquisition rate of the options, linked to the performance condition, amounted tothe acquisition rates were 100%. for the 2009 Plan.
B. TOTAL SHARE PURCHASE OPTION PLANS
B. | | TOTAL SHARE PURCHASE OPTION PLANS |
| | | 1999 Plan(a) | | 2000 Plan(b) | | 2001 Plan(c) | | 2002 Plan(d) | | Total | | Weighted Average Exercise Price | | 2001 Plan(a) | | 2002 Plan(b) | | Total | | Weighted average exercise price | | Date of the shareholders’ meeting | | May 21, 1997 | | | May 21, 1997 | | | May 17, 2001 | | | May 17, 2001 | | | | | | | | 05/17/2001 | | | | 05/17/2001 | | | | | | Date of the award(e) | | June 15, 1999 | | | July 11, 2000 | | | July 10, 2001 | | | July 9, 2002 | | | | | | | Grant date(c) | | | | 07/10/2001 | | | | 07/09/2002 | | | | | | Exercise price until May 23, 2006 included(f)(d) | | 28.25 | | | 40.68 | | | 42.05 | | | 39.58 | | | | | | | | 42.05 | | | | 39.58 | | | | | | Exercise price since May 24, 2006(f)(d) | | 27.86 | | | 40.11 | | | 41.47 | | | 39.03 | | | | | | | | 41.47 | | | | 39.03 | | | | | | Expiry date | | June 15, 2007 | | | July 11, 2008 | | | July 10, 2009 | | | July 9, 2010 | | | | | 07/10/2009 | | | | 07/09/2010 | | | Number of options(g)(e) | | | | | | | | | | Existing options as of January 1, 2007 | | 1,370,424 | | | 4,928,505 | | | 6,861,285 | | | 9,280,716 | | | 22,440,930 | | | 39.33 | | Granted | | — | | | — | | | — | | | — | | | — | | | — | | | Outstanding as of January 1, 2009 | | | | 4,691,426 | | | | 6,450,857 | | | | 11,142,283 | | | | 40.06 | | Awarded | | | | — | | | | — | | | | — | | | | — | | Cancelled | | (138,023 | ) | | (3,452 | ) | | (7,316 | ) | | (7,104 | ) | | (155,895 | ) | | 29.28 | | | (4,650,446 | ) | | | (7,920 | ) | | | (4,658,366 | ) | | | 41.47 | | Exercised | | (1,232,401 | ) | | (1,782,865 | ) | | (1,703,711 | ) | | (2,210,429 | ) | | (6,929,406 | ) | | 37.92 | | | (40,980 | ) | | | (507,676 | ) | | | (548,656 | ) | | | 39.21 | | Existing options as of January 1, 2008 | | — | | | 3,142,188 | | | 5,150,258 | | | 7,063,183 | | | 15,355,629 | | | 40.07 | | Granted | | — | | | — | | | — | | | — | | | — | | | — | | 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 | | — | | | (480,475 | ) | | (3,652 | ) | | (13,392 | ) | | (497,519 | ) | | 40.09 | | | — | | | | — | | | | — | | | | — | | Exercised | | — | | | (2,661,713 | ) | | (455,180 | ) | | (598,934 | ) | | (3,715,827 | ) | | 40.10 | | | — | | | | — | | | | — | | | | — | | Existing options as of January 1, 2009 | | — | | | — | | | 4,691,426 | | | 6,450,857 | | | 11,142,283 | | | 40.06 | | Granted | | — | | | — | | | — | | | — | | | — | | | — | | Cancelled | | — | | | — | | | (4,650,446 | ) | | (7,920 | ) | | (4,658,366 | ) | | 41.47 | | Exercised | | — | | | — | | | (40,980 | ) | | (507,676 | ) | | (548,656 | ) | | 39.21 | | Existing options as of December 31, 2009 | | — | | | — | | | — | | | 5,935,261 | | | 5,935,261 | | | 39.03 | | Outstanding as of December 31, 2011 | | | | — | | | | — | | | | — | | | | — | |
(a) | The options,Options were exercisable, subject to a continued employment condition, were exercisable only after a 5-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 the grant date.date of the grant. This plan expired on June 15, 2007.July 10, 2009. |
(b) | The options,Options were exercisable, subject to a continued employment condition, were exercisable only after a 4-year2-year vesting period from the date of the Board meeting awarding the options and had to be exercised within eightexpired 8 years from the grantafter this date. The underlying shares arising from the exercise of options may not be sold for five yearstransferred during the 4-year period from the grant date.date of the grant. This plan expired on July 11, 2008.9, 2010. |
(c) | The options, subject to a continued employment condition, were exercisable only after a 3.5-year period fromgrant date is the date of the Board meeting awarding the options and had to be exercised within eight years from the grant date. The shares arising from the exercise of options may not be sold for four years from the grant date. This plan expired on July 10, 2009.options. |
(d) | The options, subject to a continued employment condition, are exercisable only after a 2-year period from the date of the Board meeting awarding the options and must be exercised within eight years from the grant date. Underlying shares may not be sold for four years from the grant date. |
(e) | The date of award is the date of the Board of Directors meeting that awarded the options. |
(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. |
(f) | Out of the 4,671,989 options canceled in 2010, 4,671,145 options that were not exercised expired due to the expiry of the 2002 purchase option Plan on July 9, 2010. |
C. EXCHANGE GUARANTEE GRANTED TO THE HOLDERS OF ELF AQUITAINE SHARE SUBSCRIPTION OPTIONS
C. | | EXCHANGE GUARANTEE GRANTED TO THE HOLDERS OF ELF AQUITAINE SHARE SUBSCRIPTION OPTIONS |
Pursuant to the public exchange offer for Elf Aquitaine shares which was made in 1999, the Group made a commitment to guarantee the holders of Elf Aquitaine share subscription options, at the end of the period referred to in Article 163 bis C of the French Tax Code (CGI), and until the end of the period for the exercise of the options, the possibility to exchange their future Elf Aquitaine shares for TOTAL shares, on the basis of the exchange ratio of the offer (nineteen TOTAL shares for thirteen Elf Aquitaine shares). In order to take into account the spin-off of S.D.A. (Société de Développement Arkema) by Elf Aquitaine, the spin-off of Arkema by TOTAL S.A. and the four-for-one TOTAL stock split, the Board of Directors of TOTAL S.A., in accordance with the terms of the share exchange undertaking, approved on March 14, 2006 to adjust the exchange ratio described above (see pages 24 and 25 of the “Prospectus for the purpose of listing Arkema shares on Euronext Paris in connection with the allocation of Arkema shares to TOTAL S.A. shareholders”). Following the approval by Elf Aquitaine shareholders’ meeting on May 10, 2006 of the spin-off of S.D.A. by Elf Aquitaine, the approval by TOTAL S.A. shareholders’ meeting on May 12, 2006 of the spin-off of Arkema by TOTAL S.A. and the four-for-one TOTAL stock split, the exchange ratio was adjusted to six TOTAL shares for one Elf Aquitaine share on May 22, 2006.
DuringThis exchange guarantee expired on September 12, 2009, 75,699 options were exercised and 80,005 Elf Aquitaine shares were exchanged based ondue to the exchange ratioexpiry of six TOTAL shares for onethe Elf Aquitaine share as adjusted on May 22, 2006.
Assubscription option plan No. 2 of December 31, 2009, this exchange guarantee is not in effect and all Elf Aquitaine subscription plans have expired. Therefore,1999. Subsequently, no Elf Aquitaine shares are covered by the exchange guarantee.
| | | | | | | | | 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 January 1, 2009 | | 90,342 | | 6,044 | | 96,386 | | 118.25 | Outstanding Elf Aquitaine shares covered by the exchange guarantee as of January 1, 2009 | | 5,295 | | — | | 5,295 | | | Number of options exercised in 2009 | | 69,655 | | 6,044 | | 75,699 | | 119.20 | Number of shares exchanged in 2009 | | 73,961 | | 6,044 | | 80,005 | | | Outstanding position as of December 31, 2009 | | — | | — | | — | | | Total of Elf Aquitaine shares, either outstanding or to be created, covered by the exchange guarantee for TOTAL shares as of December 31, 2009 | | — | | — | | | | | TOTAL shares likely to be created within the scope of the application of the exchange guarantee as of December 31, 2009 | | — | | — | | | | |
(a)D. | | Adjustments of the number of options approved by the Board of Directors of Elf Aquitaine 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.TOTAL PERFORMANCE SHARE GRANTS |
(b) | Exercise price in euro. To take into account the spin-off 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. |
D. TOTAL RESTRICTED SHARE GRANTS
| | | | | | | | | | | | | | | | | | | | | 2005 Plan(a) | | | 2006 Plan | | | 2007 Plan | | | 2008 Plan | | | 2009 Plan | | | Total | | Date of the shareholders’ meeting | | May 17, 2005 | | | May 17, 2005 | | | May 17, 2005 | | | May 16, 2008 | | | May 16, 2008 | | | | | Date of the award(b) | | July 19, 2005 | | | July 18, 2006 | | | July 17, 2007 | | | October 9, 2008 | | | September 15, 2009 | | | | | Date of the final award (end of the vesting period) | | July 20, 2007 | | | July 19, 2008 | | | July 18, 2009 | | | October 10, 2010 | | | September 16, 2011 | | | | | Transfer authorized as from | | July 20, 2009 | | | July 19, 2010 | | | July 18, 2011 | | | October 10, 2012 | | | September 16, 2013 | | | | | Number of restricted shares | | | | | | | | | | | | | | | | | | | 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(c) | | (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(d) | | 2,840 | | | (43,822 | ) | | (29,504 | ) | | (19,220 | ) | | — | | | (89,706 | ) | Finally granted (c)(d) | | (2,840 | ) | | (2,220,134 | ) | | (336 | ) | | — | | | — | | | (2,223,310 | ) | Outstanding as of January 1, 2009 | | — | | | — | | | 2,333,217 | | | 2,772,748 | | | — | | | 5,105,965 | | Notified | | — | | | — | | | | | | — | | | 2,972,018 | | | 2,972,018 | | Cancelled | | 1,928 | | | 2,922 | | | (12,418 | ) | | (9,672 | ) | | (5,982 | ) | | (23,222 | ) | Finally granted(c)(d) | | (1,928 | ) | | (2,922 | ) | | (2,320,799 | ) | | (600 | ) | | — | | | (2,326,249 | ) | Outstanding as of December 31, 2009 | | — | | | — | | | — | | | 2,762,476 | | | 2,966,036 | | | 5,728,512 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 2005 Plan | | | 2006 Plan | | | 2007 Plan | | | 2008 Plan | | | 2009 Plan | | | 2010 Plan | | | 2011 Plan | | | Total | | Date of the shareholders’ meeting | | | 05/17/2005 | | | | 05/17/2005 | | | | 05/17/2005 | | | | 05/16/2008 | | | | 05/16/2008 | | | | 05/16/2008 | | | | 05/13/2011 | | | | | | Grant date(a) | | | 07/19/2005 | | | | 07/18/2006 | | | | 07/17/2007 | | | | 10/09/2008 | | | | 09/15/2009 | | | | 09/14/2010 | | | | 09/14/2011 | | | | | | Final grant date (end of the vesting period) | | | 07/20/2007 | | | | 07/19/2008 | | | | 07/18/2009 | | | | 10/10/2010 | | | | 09/16/2011 | | | | 09/15/2012 | | | | 09/15/2013 | | | | | | Transfer possible from | | | 07/20/2009 | | | | 07/19/2010 | | | | 07/18/2011 | | | | 10/10/2012 | | | | 09/16/2013 | | | | 09/15/2014 | | | | 09/15/2015 | | | | | | Number of performance shares | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Outstanding as of January 1, 2009 | | | — | | | | — | | | | 2,333,217 | | | | 2,772,748 | | | | | | | | | | | | | | | | 5,105,965 | | Awarded | | | — | | | | — | | | | — | | | | — | | | | 2,972,018 | | | | | | | | | | | | 2,972,018 | | Canceled | | | 1,928 | | | | 2,922 | | | | (12,418 | ) | | | (9,672 | ) | | | (5,982 | ) | | | | | | | | | | | (23,222 | ) | Finally granted(b)(c) | | | (1,928 | ) | | | (2,922 | ) | | | (2,320,799 | ) | | | (600 | ) | | | — | | | | | | | | | | | | (2,326,249 | ) | Outstanding as of January 1, 2010 | | | — | | | | — | | | | — | | | | 2,762,476 | | | | 2,966,036 | | | | | | | | | | | | 5,728,512 | | Awarded | | | — | | | | — | | | | — | | | | — | | | | — | | | | 3,010,011 | | | | | | | | 3,010,011 | | Canceled(d) | | | 1,024 | | | | 3,034 | | | | 552 | | | | (1,113,462 | ) | | | (9,796 | ) | | | (8,738 | ) | | | | | | | (1,127,386 | ) | Finally granted(b)(c) | | | (1,024 | ) | | | (3,034 | ) | | | (552 | ) | | | (1,649,014 | ) | | | (1,904 | ) | | | (636 | ) | | | | | | | (1,656,164 | ) | Outstanding as of January 1, 2011 | | | — | | | | — | | | | — | | | | — | | | | 2,954,336 | | | | 3,000,637 | | | | | | | | 5,954,973 | | Awarded | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | 3,649,770 | | | | 3,649,770 | | Canceled | | | 800 | | | | 700 | | | | 792 | | | | 356 | | | | (26,214 | ) | | | (10,750 | ) | | | (19,579 | ) | | | (53,895 | ) | Finally granted(b)(c)(e) | | | (800 | ) | | | (700 | ) | | | (792 | ) | | | (356 | ) | | | (2,928,122 | ) | | | (1,836 | ) | | | — | | | | (2,932,606 | ) | Outstanding as of December 31, 2011 | | | — | | | | — | | | | — | | | | — | | | | — | | | | 2,988,051 | | | | 3,630,191 | | | | 6,618,242 | |
(a) | The number of restricted shares was multiplied by four on May 18, 2006, to take into account the four-for-one stock split approved by the shareholders’ meeting. |
(b) | The grant date corresponds tois the date of the Board of Directors meeting that awarded the options,shares, except for the optionsshares awarded by the Board of Directors at their meeting of September 9, 2008, and granted on October 9, 2008. |
(c)(b) | RestrictedPerformance shares finally granted following the death of their beneficiaries (2005, 2006 and 2007 Plansbeneficiaries. |
(c) | Including performance shares finally granted for fiscal year 2007, 2007 Plan for fiscal year 2008, 2008 Plan for fiscal year 2009).which the entitlement right had been canceled erroneously. |
(d) | ForOut of the 20051,113,462 canceled rights to the grant share under the 2008 Plan, and 2006 Plan: final restricted share grants1,094,914 entitlement rights were canceled due to the performance condition. The acquisition rate for which entitlement right had been cancelled erroneously.the 2008 Plan was 60%. |
(e) | The acquisition rate for the 2009 Plan was 100%. |
The grant of restrictedperformance shares, which are bought back by the Company on the market, becomes finalare finally granted to their beneficiaries after a 2-year vesting period (acquisitionfrom the date of the right to restricted shares).grant. The final grant of these shares is subject to a continued employment condition and a performance condition. Moreover, the transfer of the restrictedperformance shares that were definitelyfinally granted will not be permitted between the date of final grant anduntil the end of a two-year2-year mandatory holding period.period from the date of the final grant. 2011 Plan For the 2011 Plan, the Board of Directors decided that, for each senior executive (other than the Chairman and Chief Executive Officer), the shares will be finally granted subject to a performance condition. This condition is based on the average ROE as published by the Group and calculated based on the Group’s consolidated balance sheet and statement of income for fiscal years 2011 and 2012. The acquisition rate: is equal to zero if the average ROE is less than or equal to 7%; varies on a straight-line basis between 0% and 100% if the average ROE is greater than 7% and less than 18%; and is equal to 100% if the average ROE is greater than or equal to 18%. The continued employmentBoard of Directors decided also that, for each for each beneficiary (other than the Chairman and Chief Executive Officer and the senior executives) of more than 100 shares, the shares in excess of this number will be finally granted subject to the performance condition mentioned before. In addition, as part of the 2011 plan, the Board of Directors decided that the number of performance share finally granted to the Chairman and Chief Executive Officer will be subject to two performance conditions: For 50% of the share granted, the performance condition states that the termination of the employment contract during the vesting period will also terminate the grantee’s right to a restricted share grant. For the 2009 Plan, the performance condition approved by the Board of Directors states that the half of the number of restricted shares finally granted above 100 shares is based on the average ROE of the Group. The average ROE is calculated by the Group from the consolidated balance sheet and statement of income of the Group for fiscal years 2011 and 2012. The acquisition rate is equal to zero if the average ROE is less than or equal to 7%; varies on a straight-line basis between 0% and 100% if the average ROE is more than 7% and less than 18%; and is equal to 100% if the average ROE is more than or equal to 18%.
For 50% of the share granted, the performance condition states that the number of shares finally | | granted is based on the average ROACE of the Group. The average ROACE is calculated by the Group from the consolidated balance sheet and statement of income of the Group for fiscal years 2011 and 2012. The acquisition rate is equal to zero if the average ROACE is less than or equal to 6%; varies on a straight-line basis between 0% and 100% if the average ROACE is more than 6% and less than 15%; and is equal to 100% if the average ROACE is more than or equal to 15%. |
2010 Plan For the 2010 Plan, the Board of Directors decided that, for each beneficiary of more than 100 shares, half of the shares in excess of this number will be finally granted subject to a performance condition. This condition is based on the average ROE calculated by the Group based on TOTAL’s consolidated accountsbalance 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 TOTALthe 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%.
ForDue to the 2007 and 2008 Plans,application of the performance condition, approved by the acquisition rate was 100% for the 2009 Plan.
E. | | GLOBAL FREE TOTAL SHARE PLAN |
The Board of Directors statesapproved 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. |
SunPower has three stock incentive plans: the 1996 Stock Plan (“1996 Plan”), the Second Amended and Restated 2005 SunPower Corporation Stock Incentive Plan (“2005 Plan”) and the PowerLight Corporation Common Stock Option and Common Stock Purchase Plan (“PowerLight Plan”). The PowerLight Plan was assumed by SunPower by way of the acquisition of PowerLight in fiscal 2007. Under the terms of all three plans, SunPower may issue incentive or non-statutory stock options or stock purchase rights to directors, employees and consultants to purchase common stock. The 2005 Plan was adopted by SunPower’s Board of Directors in August 2005, and was approved by shareholders in November 2005. The 2005 Plan replaced the 1996 Plan and allows not only for the grant of options, but also for the grant of stock appreciation rights, restricted stock grants, restricted stock units and other equity rights. The 2005 Plan also allows for tax withholding obligations related to stock option exercises or restricted stock awards to be satisfied through the retention of shares otherwise released upon vesting. The PowerLight Plan was adopted by PowerLight’s Board of Directors in October 2000. In May 2008, SunPower’s stockholders approved an automatic annual increase available for grant under the 2005 Plan, beginning in fiscal 2009. The automatic annual increase is equal to the lower of three percent of the outstanding shares of all classes of SunPower’s common stock measured on the last day of the immediately preceding fiscal quarter, 6.0 million shares, or such other number of shares as determined by SunPower’s Board of Directors. As of January 1, 2012, approximately 3.3 million shares were available for grant under the 2005 Plan. No new awards are being granted under the 1996 Plan or the PowerLight Plan. Incentive stock options may be granted at no less than the fair value of the common stock on the date of grant. Non-statutory stock options and stock purchase rights may be granted at no less than 85% of the fair value of the common stock at the date of grant. The options and rights become exercisable when and as determined by SunPower’s Board of Directors, although these terms generally do not exceed ten years for stock options. Under the 1996 and 2005 Plans, the options typically vest over five years with a one-year cliff and monthly vesting thereafter. Under the PowerLight Plan, the options typically vest over five years with yearly cliff vesting. Under the 2005 Plan, the restricted stock grants and restricted stock units typically vest in three equal installments annually over three years. The majority of shares issued are net of the minimum statutory withholding requirements that SunPower pays on behalf of its employees. During the six months ended January 1, 2012 SunPower withheld 221,262 shares to satisfy the employees’ tax obligations. SunPower pays such withholding requirements in cash to the appropriate taxing authorities. Shares withheld are treated as common stock repurchases for accounting and disclosure purposes and reduce the number of restricted shares finallyoutstanding upon vesting. The following table summarizes SunPower’s stock option activities: | | | | | | | | | | | | | | | | | | | Outstanding Stock Options | | | | Shares (in thousands) | | | Weighted-Average Exercise Price Per Share (in dollars) | | | Weighted-Average Remaining Contractual Term (in years) | | | Aggregate Intrinsic Value (in thousands dollars) | | Outstanding as of July 3, 2011 | | | 519 | | | | 25.39 | | | | | | | | | | Exercised | | | (29 | ) | | | 3.93 | | | | | | | | | | Forfeited | | | (6 | ) | | | 31.29 | | | | | | | | | | | | | | | | | | | | | | | Outstanding as of January 1, 2012 | | | 484 | | | | 26.62 | | | | 4.71 | | | | 480 | | | | | | | | | | | | | | | Exercisable as of January 1, 2012 | | | 441 | | | | 24.52 | | | | 4.53 | | | | 480 | | Expected to vest after January 1, 2012 | | | 40 | | | | 48.08 | | | | 6.64 | | | | — | |
The intrinsic value of options exercised in the six months ended January 1, 2012 was $0.3 million. There were no stock options granted isin 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 ROEoption holders had all option holders exercised their options as of the Group.that date. The ROE is calculated based on the consolidated accounts published by TOTALtotal number of in-the-money options exercisable was 0.1 million shares as of January 1, 2012. The following table summarizes SunPower’s non-vested stock options and restricted stock activities thereafter: | | | | | | | | | | | | | | | | | | | Stock Options | | | Restricted Stock Awards and Units | | | | Shares (in thousands) | | | Weighted-Average Exercise Price Per Share (in dollars) | | | Shares (in thousands) | | | Weighted-Average Grant Date Fair Value Per Share (in dollars)(1) | | Outstanding as of July 3, 2011 | | | 67 | | | | 41.34 | | | | 7,198 | | | | 16.03 | | Granted | | | — | | | | — | | | | 2,336 | | | | 6.91 | | Vested(2) | | | (19 | ) | | | 28.73 | | | | (691 | ) | | | 18.96 | | Forfeited | | | (5 | ) | | | 31.29 | | | | (1,473 | ) | | | 14.10 | | Outstanding as of December 31, 2011 | | | 43 | | | | 48.33 | | | | 7,370 | | | | 13.25 | |
(1) | The Company estimates the fair value of the restricted stock unit awards as the stock price on the grant date. |
(2) | Restricted stock awards and units vested include shares withheld on behalf of employees to satisfy the minimum statutory tax withholding requirements. |
G. | | SHARE-BASED PAYMENT EXPENSE |
Share-based payment expense before tax for the fiscal year preceding the final grant. This acquisition rate:2011 amounts to€178 million and is broken down as follows: is equal to zero if the ROE is less than or equal to 10%;
varies on a straight-line basis between 0% and 80% if the ROE is greater than 10% and less than 18%;
varies on a straight-line basis between 80% and 100% if the ROE is greater than or equal to 18% and less than 30%; and
is equal to 100% if the ROE is more than or equal to 30%.€27 million for TOTAL share subscription plans;
For
€134 million for TOTAL restricted shares plans; and €17 million for SunPower plans. Share-based payment expense before tax for the 2005, 2006year 2010 amounted to€140 million and 2007 Plans, the acquisition rate of the grantedwas broken down as follows: €31 million for TOTAL share subscription plans; and €109 million for TOTAL restricted shares linked to the performance condition, amounted to 100%. E. SHARE-BASED PAYMENT EXPENSEplans.
Share-based payment expense before tax for the year 2009 amountsamounted to€106 million and can bewas broken down as follows: €38 million for TOTAL share subscription plans; and €68 million for TOTAL restricted shares plans. Share-based payment expense before tax for the year 2008 amounted to€154 million and can be broken down as follows:
€61 million for TOTAL share subscription plans;
€105 million for TOTAL restricted shares plans; and
€(12) million for the adjustment to the expense booked in 2007 related to TOTAL capital increase reserved for employees (see Note 17 to the Consolidated Financial Statements).
Share-based payment expense before tax for the year 2007 amounted to€196 million and can be broken down as follows:
€65 million for TOTAL share subscription plans;
€109 million for TOTAL restricted shares plans; and
€22 million for TOTAL capital increase reserved for employees (see Note 17 to the Consolidated Financial Statements).
The fair value of the options granted in 2009, 20082011, 2010 and 20072009 has been measured according to the Black- ScholesBlack-Scholes method and based on the following assumptions: | For the year ended December 31, | | 2009 | | 2008 | | 2007 | | 2011 | | | 2010 | | | 2009 | | Risk free interest rate (%)(a) | | 2.9 | | 4.3 | | 4.9 | | | 2.0 | | | | 2.1 | | | | 2.9 | | Expected dividends (%)(b) | | 4.8 | | 8.4 | | 3.9 | | | 5.6 | | | | 5.9 | | | | 4.8 | | Expected volatility (%)(c) | | 31.0 | | 32.7 | | 25.3 | | | 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) | | 8.4 | | 5.0 | | 13.9 | | | 4.4 | | | | 5.8 | | | | 8.4 | |
(a) | Zero coupon Euro swap rate at 6 years. |
(b) | The expected dividends are based on the price of TOTAL share derivatives traded on the markets. |
(c) | The expected volatility is based on the implied volatility of TOTAL share options and of share indices options traded on the markets. |
At the shareholders’ meeting held on May 21, 2010, the shareholders delegated to the Board of Directors the authority to increase the share capital of the Company in one or more transactions and within a maximum period of 26 months from the date of the meeting, by an amount not exceeding 1.5% of the share capital outstanding on the date of the meeting of the Board of Directors at which a decision to proceed with an issuance is made reserving subscriptions for such issuance to the Group employees participating in a company savings plan. It is being specified that the amount of any such capital increase reserved for Group employees was counted against the aggregate maximum nominal amount of share capital increases authorized by the shareholders’ meeting held on May 21, 2010 for issuing new ordinary shares or other securities granting immediate or future access to the Company’s share capital with preferential subscription rights (€2.5 billion in nominal value). Pursuant to this delegation of authorization, the Board of Directors, during its October 28, 2010 meeting, implemented a capital increase reserved for employees within the limit of 12 million shares, with dividend rights as of the January 1, 2010 and delegated all power to the Chairman and 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 reimbursable “in fine”. During the year 2007,2011, the main assumptions used for the valuation of the cost of capital increase reserved for employees were the following: | | | | | For the year ended December 31, | | 20072011 | | Date of the Board of Directors meeting that decided the issue | | November 6, 2007 | October 28, 2010 | | Subscription price (€) | | 44.4 | 34.80 | | Share price at the reference date of the Board meeting (€) | | 54.6 | Number of shares (in millions)(a)
| | 10.6 | 41.60 | | Number of shares (in millions) | | | 8.90 | | Risk free interest rate (%)(b) | | 4.1 | 2.82 | | Employees loan financing rate (%)(c) | | 7.5 | 7.23 | | 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, (€ million) | | 2009 | | 2008 | | 2007 | Personnel expenses(a) | | | | | | | Wages and salaries (including social charges) | | 6,177 | | 6,014 | | 6,058 | Group employees(a) | | | | | | | France | | | | | | | • Management | | 10,906 | | 10,688 | | 10,517 | • Other | | 25,501 | | 26,413 | | 26,779 | International | | | | | | | • Management | | 15,243 | | 14,709 | | 14,225 | • Other | | 44,737 | | 45,149 | | 44,921 | Total | | 96,387 | | 96,959 | | 96,442 |
(a) | Number of employees and personnel expenses of fully consolidated subsidiaries. |
| | | | | | | | | | | | | For the year ended December 31, | | 2011 | | | 2010 | | | 2009 | | Personnel expenses (M€) | | | | | | | | | | | | | Wages and salaries (including social charges) | | | 6,579 | | | | 6,246 | | | | 6,177 | | Group employees | | | | | | | | | | | | | France | | | | | | | | | | | | | • Management | | | 11,123 | | | | 10,852 | | | | 10,906 | | • Other | | | 23,914 | | | | 24,317 | | | | 25,501 | | International | | | | | | | | | | | | | • Management | | | 15,713 | | | | 15,146 | | | | 15,243 | | • Other | | | 45,354 | | | | 42,540 | | | | 44,737 | | Total | | | 96,104 | | | | 92,855 | | | | 96,387 | |
The number of employees includes only employees of fully consolidated subsidiaries. The 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) Cash flow from operating activities
A) | | CASH FLOW FROM OPERATING ACTIVITIES |
The following table gives additional information on cash paid or received in the cash flow from operating activities: | For the year ended December 31, (€ million) | | 2009 | | 2008 | | 2007 | | | For the year ended December 31, (M€) | | | 2011 | | 2010 | | 2009 | | Interests paid | | (678 | ) | | (958 | ) | | (1,680 | ) | | | (679 | ) | | | (470 | ) | | | (678 | ) | Interests received | | 148 | | | 505 | | | 1,277 | | | | 277 | | | | 132 | | | | 148 | | Income tax paid(a) | | (6,202 | ) | | (10,631 | ) | | (9,687 | ) | | | (12,061 | ) | | | (8,848 | ) | | | (7,027 | ) | Dividends received | | 1,456 | | | 1,590 | | | 1,109 | | | | 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,(€ million) | | 2009 | | 2008 | | 2007 | | | For the year ended December 31, (M€) | | | 2011 | | 2010 | | 2009 | | Inventories | | (4,217 | ) | | 4,020 | | | (2,706 | ) | | | (1,845 | ) | | | (1,896 | ) | | | (4,217 | ) | Accounts receivable | | (344 | ) | | 3,222 | | | (2,963 | ) | | | (1,287 | ) | | | (2,712 | ) | | | (344 | ) | Other current assets | | 1,505 | | | (982 | ) | | (1,341 | ) | | | (2,409 | ) | | | 911 | | | | 1,505 | | Accounts payable | | 571 | | | (3,056 | ) | | 4,508 | | | | 2,646 | | | | 2,482 | | | | 571 | | Other creditors and accrued liabilities | | (831 | ) | | (633 | ) | | 1,026 | | | | 1,156 | | | | 719 | | | | (831 | ) | Net amount | | (3,316 | ) | | 2,571 | | | (1,476 | ) | | | (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, (€ million) | | 2009 | | 2008 | | 2007 | | | For the year ended December 31, (M€) | | | 2011 | | 2010 | | 2009 | | Issuance of non-current debt | | 6,309 | | | 5,513 | | | 3,313 | | | | 4,234 | | | | 3,995 | | | | 6,309 | | Repayment of non-current debt | | (787 | ) | | (2,504 | ) | | (93 | ) | | | (165 | ) | | | (206 | ) | | | (787 | ) | Net amount | | 5,522 | | | 3,009 | | | 3,220 | | | | 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, (€ million) | | 2009 | | 2008 | | 2007 | | For the year ended December 31, (M€) | | | 2011 | | | 2010 | | | 2009 | | Cash | | 2,448 | | 1,836 | | 1,930 | | | 4,715 | | | | 4,679 | | | | 2,448 | | Cash equivalents | | 9,214 | | 10,485 | | 4,058 | | | 9,310 | | | | 9,810 | | | | 9,214 | | Total | | 11,662 | | 12,321 | | 5,988 | | | 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, 2009 (€ million) Assets/(Liabilities) | | Financial instruments related to financing and trading activities | | Other financial instruments | | Total | | Fair value | | | | | Amortized cost | | Fair value | | | | | | | | | | | | | | | | | | | | | | | | | | | Available for sale(a) | | Held for trading | | Financial debt(b) | | Hedging of financial debt | | Cash flow hedge | | 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 | | 2,367 | | | | | | | | | | | | | | | | | 2,367 | | | 2,367 | | | | 2,246 | | | | | | | | | | | | | | | | | | 2,246 | | | | 2,246 | | Other investments | | | | 1,162 | | | | | | | | | | | | | | 1,162 | | | 1,162 | | | | | | 3,674 | | | | | | | | | | | | | | | | 3,674 | | | | 3,674 | | Hedging instruments of non-current financial debt | | | | | | | | | | 889 | | | 136 | | | | | | 1,025 | | | 1,025 | | | | | | | | | | | | 1,971 | | | | 5 | | | | | | | | 1,976 | | | | 1,976 | | Other non-current assets | | 1,284 | | | | | | | | | | | | | | | | | 1,284 | | | 1,284 | | | | 2,055 | | | | | | | | | | | | | | | | | | 2,055 | | | | 2,055 | | Accounts receivable, net | | | | | | | | | | | | | | | | 15,719 | | | 15,719 | | | 15,719 | | | | | | | | | | | | | | | | | | 20,049 | | | | 20,049 | | | | 20,049 | | Other operating receivables | | | | | | 1,029 | | | | | | | | | | | 4,116 | | | 5,145 | | | 5,145 | | | | | | | | 1,074 | | | | | | | | | | | | 6,393 | | | | 7,467 | | | | 7,467 | | Current financial assets | | 55 | | | | | 53 | | | | | 197 | | | | | 6 | | | | | 311 | | | 311 | | | | 146 | | | | | | 159 | | | | | | 383 | | | | 12 | | | | — | | | | | | 700 | | | | 700 | | Cash and cash equivalents | | | | | | | | | | | | | | | | 11,662 | | | 11,662 | | | 11,662 | | | | 14,025 | | | | 14,025 | | | | 14,025 | | Total financial assets | | 3,706 | | | 1,162 | | 1,082 | | | — | | | 1,086 | | | 136 | | 6 | | | 31,497 | | | 38,675 | | | 38,675 | | | | 4,447 | | | | 3,674 | | | | 1,233 | | | | — | | | | 2,354 | | | | 17 | | | | — | | | | 40,467 | | | | 52,192 | | | | 52,192 | | Total non-financial assets | | | | | | | | | | | | | | | | | | 89,078 | | | | | | 111,857 | | | Total assets | | | | | | | | | | | | | | | | | | 127,753 | | | | | | 164,049 | | | | Non-current financial debt | | (389 | ) | | | | | | (18,807 | ) | | (241 | ) | | | | | | | | (19,437 | ) | | (19,437 | ) | | | (4,858 | ) | | | | | | | (17,551 | ) | | | (97 | ) | | | (49 | ) | | | | | (2 | ) | | | (22,557 | ) | | | (23,247 | ) | Accounts payable | | | | | | | | | | | | | | | | (15,383 | ) | | (15,383 | ) | | (15,383 | ) | | | | | | | | | | | | | | | | | (22,086 | ) | | | (22,086 | ) | | | (22,086 | ) | Other operating liabilities | | | | | | (923 | ) | | | | | | | | | | (3,783 | ) | | (4,706 | ) | | (4,706 | ) | | | | | | | (606 | ) | | | | | | | | | | | (4,835 | ) | | | (5,441 | ) | | | (5,441 | ) | Current borrowings | | (4,849 | ) | | | | | | (2,145 | ) | | | | | | | | | | (6,994 | ) | | (6,994 | ) | | | (6,158 | ) | | | | | | | (3,517 | ) | | | | | | | | | | | (9,675 | ) | | | (9,675 | ) | Other current financial liabilities | | | | | | (25 | ) | | | | (97 | ) | | | | (1 | ) | | | | (123 | ) | | (123 | ) | | | (87 | ) | | | (40 | ) | | | (14 | ) | | | (26 | ) | | | (167 | ) | | | (167 | ) | Total financial liabilities | | (5,238 | ) | | | (948 | ) | | (20,952 | ) | | (338 | ) | | — | | (1 | ) | | (19,166 | ) | | (46,643 | ) | | (46,643 | ) | | | (11,016 | ) | | | — | | | | (693 | ) | | | (21,068 | ) | | | (137 | ) | | | (63 | ) | | | (26 | ) | | | (26,923 | ) | | | (59,926 | ) | | | (60,616 | ) | Total non-financial liabilities | | | | | | | | | | | | | | | | | | (81,110 | ) | | | | | (104,123 | ) | | Total liabilities | | | | | | | | | | | | | | | | | | (127,753 | ) | | | | | (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 M(iii) to the Consolidated Financial Statements). |
| As of December 31, 2008 (€ million) Assets/(Liabilities) | | Financial instruments related to financing and trading activities | | Other financial instruments | | Total | | Fair value | | | | | Amortized cost | | Fair value | | | | | | | | | | | | | | | | | | | | | | | | | | | Available for sale(a) | | Held for trading | | Financial debt(b) | | Hedging of financial debt | | Cash flow hedge | | 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 | | 2,005 | | | | | | | | | | | | | | | | | 2,005 | | | 2,005 | | | | 2,383 | | | | | | | | | | | | | | | | | | 2,383 | | | | 2,383 | | Other investments | | | | 1,165 | | | | | | | | | | | | | | 1,165 | | | 1,165 | | | | | | 4,590 | | | | | | | | | | | | | | | | 4,590 | | | | 4,590 | | Hedging instruments of non-current financial debt | | | | | | | | | | 892 | | | | | | | | | 892 | | | 892 | | | | | | | | | | | | 1,814 | | | | 56 | | | | | | | | 1,870 | | | | 1,870 | | Other non-current assets | | 1,403 | | | | | | | | | | | | | | | | | 1,403 | | | 1,403 | | | | 1,596 | | | | | | | | | | | | | | | | | | 1,596 | | | | 1,596 | | Accounts receivable, net | | | | | | — | | | | | | | | | | | 15,287 | | | 15,287 | | | 15,287 | | | | | | | | | | | | | | | | | | 18,159 | | | | 18,159 | | | | 18,159 | | Other operating receivables | | | | | | 1,664 | | | | | | | | | | | 4,544 | | | 6,208 | | | 6,208 | | | | | | | | 499 | | | | | | | | | | | | 3,908 | | | | 4,407 | | | | 4,407 | | Current financial assets | | 1 | | | | | 86 | | | | | 100 | | | | | — | | | | 187 | | | 187 | | | | 869 | | | | | | 38 | | | | | | 292 | | | | | | 6 | | | | | | 1,205 | | | | 1,205 | | Cash and cash equivalents | | | | | | | | | | | | | | | | 12,321 | | | 12,321 | | | 12,321 | | | | 14,489 | | | | 14,489 | | | | 14,489 | | Total financial assets | | 3,409 | | | 1,165 | | 1,750 | | | — | | | 992 | | | — | | — | | 32,152 | | | 39,468 | | | 39,468 | | | | 4,848 | | | | 4,590 | | | | 537 | | | | — | | | | 2,106 | | | | 56 | | | | 6 | | | | 36,556 | | | | 48,699 | | | | 48,699 | | Total non-financial assets | | | | | | | | | | | | | | | | | | 78,842 | | | | | | 95,019 | | | Total assets | | | | | | | | | | | | | | | | | | 118,310 | | | | | | 143,718 | | | | Non-current financial debt | | (414 | ) | | | | | | (15,337 | ) | | (440 | ) | | | | | | | | (16,191 | ) | | (16,191 | ) | | | (3,186 | ) | | | | | | | (17,419 | ) | | | (178 | ) | | | | | | | | | (20,783 | ) | | | (21,172 | ) | Accounts payable | | | | | | — | | | | | | | | | | | (14,815 | ) | | (14,815 | ) | | (14,815 | ) | | | | | | | | | | | | | | | | | (18,450 | ) | | | (18,450 | ) | | | (18,450 | ) | Other operating liabilities | | | | | | (1,033 | ) | | | | | | | | | | (3,264 | ) | | (4,297 | ) | | (4,297 | ) | | | | | | | (559 | ) | | | | | | | | | | | (3,015 | ) | | | (3,574 | ) | | | (3,574 | ) | Current borrowings | | (5,721 | ) | | | | | | (2,001 | ) | | | | | | | | | | (7,722 | ) | | (7,722 | ) | | | (5,916 | ) | | | | | | | (3,737 | ) | | | | | | | | | | | (9,653 | ) | | | (9,653 | ) | Other current financial liabilities | | | | | | (146 | ) | | | | (12 | ) | | | | | | | | (158 | ) | | (158 | ) | | | (147 | ) | | | (12 | ) | | | — | | | | (159 | ) | | | (159 | ) | Total financial liabilities | | (6,135 | ) | | | (1,179 | ) | | (17,338 | ) | | (452 | ) | | — | | — | | (18,079 | ) | | (43,183 | ) | | (43,183 | ) | | | (9,102 | ) | | | (706 | ) | | | (21,156 | ) | | | (190 | ) | | | — | | | | — | | | | (21,465 | ) | | | (52,619 | ) | | | (53,008 | ) | Total non-financial liabilities | | | | | | | | | | | | | | | | | | (75,127 | ) | | | | | (91,099 | ) | | Total liabilities | | | | | | | | | | | | | | | | | | (118,310 | ) | | | | | (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 M(iii) to the Consolidated Financial Statements). |
| As of December 31, 2007 (€ million) Assets / (Liabilities) | | Financial instruments related to financing and trading activities | | Other financial instruments | | Total | | Fair value | | | | | Amortized cost | | Fair value | | | | | | | | | | | | | | | | | | | | | | | | | | | Available for sale(a) | | Held for trading | | Financial debt(b) | | Hedging of financial debt | | Cash flow hedge | | 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 | | 2,575 | | | | | | | | | | | | | | | | | 2,575 | | | 2,575 | | | | 2,367 | | | | | | | | | | | | | | | | | | 2,367 | | | | 2,367 | | Other investments | | | | 1,291 | | | | | | | | | | | | | | 1,291 | | | 1,291 | | | | | | 1,162 | | | | | | | | | | | | | | | | 1,162 | | | | 1,162 | | Hedging instruments of non-current financial debt | | | | | | | | | | 460 | | | | | | | | | 460 | | | 460 | | | | | | | | | | | | 889 | | | | 136 | | | | | | | | 1,025 | | | | 1,025 | | Other non-current assets | | 851 | | | | | | | | | | | | | | | | | 851 | | | 851 | | | | 1,284 | | | | | | | | | | | | | | | | | | 1,284 | | | | 1,284 | | Accounts receivable, net | | | | | | 464 | | | | | | | | | | | 18,665 | | | 19,129 | | | 19,129 | | | | | | | | | | | | | | | | | | 15,719 | | | | 15,719 | | | | 15,719 | | Other operating receivables | | | | | | 519 | | | | | | | | | | | 3,911 | | | 4,430 | | | 4,430 | | | | | | | | 1,029 | | | | | | | | | | | | 4,116 | | | | 5,145 | | | | 5,145 | | Current financial assets | | 850 | | | | | 12 | | | | | 388 | | | | | 14 | | | | 1,264 | | | 1,264 | | | | 55 | | | | | | 53 | | | | | | 197 | | | | | | 6 | | | | | | 311 | | | | 311 | | Cash and cash equivalents | | | | | | | | | | | | | | | | 5,988 | | | 5,988 | | | 5,988 | | | | 11,662 | | | | 11,662 | | | | 11,662 | | Total financial assets | | 4,276 | | | 1,291 | | 995 | | | — | | | 848 | | | | 14 | | 28,564 | | | 35,988 | | | 35,988 | | | | 3,706 | | | | 1,162 | | | | 1,082 | | | | — | | | | 1,086 | | | | 136 | | | | 6 | | | | 31,497 | | | | 38,675 | | | | 38,675 | | Total non-financial assets | | | | | | | | | | | | | | | | | | 77,553 | | | | | | 89,078 | | | Total assets | | | | | | | | | | | | | | | | | | 113,541 | | | | | | 127,753 | | | | Non-current financial debt | | (532 | ) | | | | | | (13,975 | ) | | (369 | ) | | | | | | | | (14,876 | ) | | (14,876 | ) | | | (2,089 | ) | | | | | | | (17,107 | ) | | | (241 | ) | | | | | | | | | (19,437 | ) | | | (19,905 | ) | Accounts payable | | | | | | (243 | ) | | | | | | | | | | (17,940 | ) | | (18,183 | ) | | (18,183 | ) | | | | | | | | | | | | | | | | | (15,383 | ) | | | (15,383 | ) | | | (15,383 | ) | Other operating liabilities | | | | | | (490 | ) | | | | | | | | | | (3,410 | ) | | (3,900 | ) | | (3,900 | ) | | | | | | | (923 | ) | | | | | | | | | | | (3,783 | ) | | | (4,706 | ) | | | (4,706 | ) | Current borrowings | | (2,655 | ) | | | | | | (1,958 | ) | | | | | | | | | | (4,613 | ) | | (4,613 | ) | | | (4,849 | ) | | | | | | | (2,145 | ) | | | | | | | | | | | (6,994 | ) | | | (6,994 | ) | Other current financial liabilities | | | | | | (59 | ) | | | | (1 | ) | | | | | | | | (60 | ) | | (60 | ) | | | (25 | ) | | | (97 | ) | | | (1 | ) | | | (123 | ) | | | (123 | ) | Total financial liabilities | | (3,187 | ) | | | (792 | ) | | (15,933 | ) | | (370 | ) | | | | | (21,350 | ) | | (41,632 | ) | | (41,632 | ) | | | (6,938 | ) | | | (948 | ) | | | (19,252 | ) | | | (338 | ) | | | — | | | | (1 | ) | | | (19,166 | ) | | | (46,643 | ) | | | (47,111 | ) | Total non-financial liabilities | | | | | | | | | | | | | | | | | | (71,909 | ) | | | | | (81,110 | ) | | Total liabilities | | | | | | | | | | | | | | | | | | (113,541 | ) | | | | | (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 M(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, (€ million) | | 2009 | | 2008 | | 2007 | | | For the year ended December 31, (M€) | | | 2011 | | 2010 | | 2009 | | Assets available for sale (investments): | | | | | | | | | | | | | — dividend income on non-consolidated subsidiaries | | 210 | | | 238 | | | 218 | | | | 330 | | | | 255 | | | | 210 | | — gains (losses) on disposal of assets | | 6 | | | 15 | | | 170 | | | | 103 | | | | 60 | | | | 6 | | — other | | (18 | ) | | (15 | ) | | (63 | ) | | | (29 | ) | | | (17 | ) | | | (18 | ) | Loans and receivables | | 41 | | | 100 | | | (2 | ) | | | (34 | ) | | | 90 | | | | 41 | | Impact on net operating income | | 239 | | | 338 | | | 323 | | | | 370 | | | | 388 | | | | 239 | |
The impact in the statement of income mainly includes: Dividends and gains or losses on disposal of other investments classified as “Other investments”; Financial gains and depreciation on loans related to equity affiliates, non-consolidated companies and on receivables reported in “Loans and receivables”. 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, (€ million) | | 2009 | | | 2008 | | | 2007 | | Loans and receivables | | 158 | | | 547 | | | 1,135 | | Financing liabilities and associated hedging instruments | | (563 | ) | | (996 | ) | | (1,721 | ) | Fair value hedge (ineffective portion) | | 33 | | | (4 | ) | | (26 | ) | Assets and liabilities held for trading | | (26 | ) | | (74 | ) | | 73 | | Impact on the cost of net debt | | (398 | ) | | (527 | ) | | (539 | ) |
| | | | | | | | | | | | | 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, (€ million) | | 2009 | | 2008 | | 2007 | | | For the year ended December 31, (M€) | | | 2011 | | 2010 | | 2009 | | Revaluation at market value of bonds | | (183 | ) | | (66 | ) | | 137 | | | | (301 | ) | | | (1,164 | ) | | | (183 | ) | Swap hedging of bonds | | 216 | | | 62 | | | (163 | ) | | | 318 | | | | 1,168 | | | | 216 | | Ineffective portion of the fair value hedge | | 33 | | | (4 | ) | | (26 | ) | | | 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,(€ million) | | As of January 1, | | | Variations | | | Disposals | | As of December 31, | 2009 | | 124 | | | (99 | ) | | — | | 25 | 2008 | | 29 | | | 95 | | | — | | 124 | 2007 | | (188 | ) | | 217 | | | — | | 29 |
| | | | | | | | | | | | | | | | | For the year ended December 31, (M€) | | As of January 1, | | | Variations | | | Disposals | | | As of December 31, | | 2011 | | | (243 | ) | | | 139 | | | | — | | | | (104 | ) | 2010 | | | 25 | | | | (268 | ) | | | — | | | | (243 | ) | 2009 | | | 124 | | | | (99 | ) | | | — | | | | 25 | |
As of December 31, 2009,2011, the fair value of the open instruments amounts to€5(26) million compared to zero€6 million in 20082010 and€145 million in 2007.2009. Cash flow hedge The impact on the statement of income and on equity of the bond hedging instruments qualified as cash flow hedges is detailed as follows: | For the year ended December 31,(€ million) | | 2009 | | 2008 | | 2007 | | For the year ended December 31, (M€) | | | 2011 | | 2010 | | 2009 | | Profit (Loss) recorded in equity during the period | | 128 | | — | | — | | | (84 | ) | | | (80 | ) | | | 128 | | Recycled amount from equity to the income statement during the period | | 221 | | — | | — | | | (47 | ) | | | (115 | ) | | | 221 | |
As of December 31, 2011, 2010 and 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 derivative instruments, excluding the commodity contracts, is detailed in the following table: | As of December 31, 2009(€ million) | | | | Notional value(a) | | Assets/(Liabilities) | | Fair value | | Total | | 2010 | | 2011 | | 2012 | | 2013 | | 2014 | | 2015 and after | | 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) | | (241 | ) | | 4,615 | | | | | | | | | | | | | | | (97 | ) | | | 1,478 | | | | | | | | | | | | | | Swaps hedging fixed-rates bonds (assets) | | 889 | | | 11,076 | | | | | | | | | | | | | | | 1,971 | | | | 15,653 | | | | | | | | | | | | | | Total swaps hedging fixed-rates bonds (assets and liabilities) | | 648 | | | 15,691 | | — | | 3,345 | | 2,914 | | 3,450 | | 1,884 | | 4,098 | | | 1,874 | | | | 17,131 | | | | | | 4,204 | | | | 4,215 | | | | 3,380 | | | | 1,661 | | | | 3,671 | | Swaps hedging fixed-rates bonds (current portion) (liabilities) | | (97 | ) | | 912 | | | | | | | | | | | | | | | (40 | ) | | | 642 | | | | | | | | | | | | | | Swaps hedging fixed-rates bonds (current portion) (assets) | | 197 | | | 1,084 | | | | | | | | | | | | | | | 383 | | | | 2,349 | | | | | | | | | | | | | | Total swaps hedging fixed-rates bonds (current portion) (assets and liabilities) | | 100 | | | 1,996 | | 1,996 | | | | | | | | | | | | | 343 | | | | 2,991 | | | | 2,991 | | | | | | | | | | | | Cash flow hedge | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Swaps hedging fixed-rates bonds (liabilities) | | | | | | | | | | | | | | | | | | | (49 | ) | | | 967 | | | | | | | | | | | | | | Swaps hedging fixed-rates bonds (assets) | | 136 | | | 1,837 | | | | | | 295 | | | | | | 1,542 | | | 5 | | | | 749 | | | | | | | | | | | | | | Total swaps hedging fixed-rates bonds (assets and liabilities) | | 136 | | | 1,837 | | | | | | 295 | | | | | | 1,542 | | | (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) | | 6 | | | 701 | | | | | | | | | | | | | | | — | | | | — | | | | | | | | | | | | | | Currency swaps and forward exchange contracts (liabilities) | | (1 | ) | | 224 | | | | | | | | | | | | | | | (26 | ) | | | 881 | | | | | | | | | | | | | | Total swaps hedging net investments | | 5 | | | 925 | | 925 | | | | | | | | | | | | | (26 | ) | | | 881 | | | | 881 | | | | | | | | | | | | Held for trading | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Other interest rate swaps (assets) | | | | 1,459 | | | | | | | | | | | | | | | 1 | | | | 3,605 | | | | | | | | | | | | | | Other interest rate swaps (liabilities) | | (1 | ) | | 10,865 | | | | | | | | | | | | | | | (2 | ) | | | 14,679 | | | | | | | | | | | | | | Total other interest rate swaps (assets and liabilities) | | (1 | ) | | 12,324 | | 12,208 | | 114 | | | | | | | | 2 | | | (1 | ) | | | 18,284 | | | | 18,284 | | | | — | | | | — | | | | — | | | | — | | | | — | | Currency swaps and forward exchange contracts (assets) | | 53 | | | 4,017 | | | | | | | | | | | | | | | 158 | | | | 6,984 | | | | | | | | | | | | | | Currency swaps and forward exchange contracts (liabilities) | | (24 | ) | | 3,456 | | | | | | | | | | | | | | | (85 | ) | | | 4,453 | | | | | | | | | | | | | | Total currency swaps and forward exchange contracts (assets and liabilities) | | 29 | | | 7,473 | | 7,224 | | | | 52 | | 50 | | 47 | | 100 | | | 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, 2008(€ million) | | | | Notional value(a) | | ASSETS/(LIABILITIES) | | Fair value | | Total | | 2009 | | 2010 | | 2011 | | 2012 | | 2013 | | 2014 and after | | 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) | | (440 | ) | | 9,309 | | | | | | | | | | | | | | | (178 | ) | | | 2,244 | | | | | | | | | | | | | | Swaps hedging fixed-rates bonds (assets) | | 892 | | | 4,195 | | | | | | | | | | | | | | | 1,814 | | | | 13,939 | | | | | | | | | | | | | | Total swaps hedging fixed-rates bonds (assets and liabilities) | | 452 | | | 13,504 | | | | 2,048 | | 3,373 | | 3,233 | | 3,032 | | 1,818 | | | 1,636 | | | | 16,183 | | | | | | 2,967 | | | | 3,461 | | | | 2,421 | | | | 3,328 | | | | 4,006 | | Swaps hedging fixed-rates bonds (current portion) (liabilities) | | (12 | ) | | 92 | | | | | | | | | | | | | | | (12 | ) | | | 592 | | | | | | | | | | | | | | Swaps hedging fixed-rates bonds (current portion) (assets) | | 100 | | | 1,871 | | | | | | | | | | | | | | | 292 | | | | 2,815 | | | | | | | | | | | | | | Total swaps hedging fixed-rates bonds (current portion) (assets and liabilities) | | 88 | | | 1,963 | | 1,963 | | | | | | | | | | | | | 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) | | — | | | 1,347 | | 1,347 | | | | | | | | | | | | | — | | | | — | | | | | | | | | | | | | | Total swaps hedging net investments | | | | 6 | | | | 381 | | | | 381 | | | | | | | | | | | | Held for trading | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Other interest rate swaps (assets) | | — | | | 2,853 | | | | | | | | | | | | | | | 1 | | | | 6,463 | | | | | | | | | | | | | | Other interest rate swaps (liabilities) | | (4 | ) | | 5,712 | | | | | | | | | | | | | | | (3 | ) | | | 11,395 | | | | | | | | | | | | | | Total other interest rate swaps (assets and liabilities) | | (4 | ) | | 8,565 | | 8,559 | | 4 | | | | | | | | 2 | | | (2 | ) | | | 17,858 | | | | 17,667 | | | | 189 | | | | — | | | | — | | | | 2 | | | | — | | Currency swaps and forward exchange contracts (assets) | | 86 | | | 5,458 | | | | | | | | | | | | | | | 37 | | | | 1,532 | | | | | | | | | | | | | | Currency swaps and forward exchange contracts (liabilities) | | (142 | ) | | 2,167 | | | | | | | | | | | | | | | (144 | ) | | | 6,757 | | | | | | | | | | | | | | Total currency swaps and forward exchange contracts (assets and liabilities) | | (56 | ) | | 7,625 | | 6,595 | | 483 | | 114 | | 67 | | 76 | | 290 | | | (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, 2007(€ million) | | | | Notional value(a) | | ASSETS/(LIABILITIES) | | Fair value | | Total | | 2008 | | 2009 | | 2010 | | 2011 | | 2012 | | 2013 and after | | 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) | | (369 | ) | | 7,506 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Swaps hedging fixed-rates bonds (assets) | | 460 | | | 3,982 | | | | | | | | | | | | | | | 136 | | | | 1,837 | | | | | | | | 295 | | | | | | | | 1,542 | | Total swaps hedging fixed-rates bonds (assets and liabilities) | | 91 | | | 11,488 | | | | 1,910 | | 1,836 | | 2,725 | | 2,437 | | 2,580 | | | 136 | | | | 1,837 | | | | | | | | 295 | | | | | | | | 1,542 | | Swaps hedging fixed-rates bonds (current portion) (liabilities) | | (1 | ) | | 306 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Swaps hedging fixed-rates bonds (current portion) (assets) | | 388 | | | 1,265 | | | | | | | | | | | | | | | | | | | | | | | | | | | Total swaps hedging fixed-rates bonds (current portion) (assets and liabilities) | | 387 | | | 1,571 | | 1,571 | | | | | | | | | | | | | | | | | | | | | | | | | | | Net investment hedge | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Currency swaps and forward exchange contracts (assets) | | 14 | | | 695 | | 695 | | | | | | | | | | | | | 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 | | | 8,249 | | | | | | | | | | | | | | | | | 1,459 | | | | | | | | | | | | | | Other interest rate swaps (liabilities) | | — | | | 3,815 | | | | | | | | | | | | | | | (1 | ) | | | 10,865 | | | | | | | | | | | | | | Total other interest rate swaps (assets and liabilities) | | 1 | | | 12,064 | | 12,058 | | — | | 4 | | — | | — | | 2 | | | (1 | ) | | | 12,324 | | | | 12,208 | | | | 114 | | | | | | | | | | 2 | | Currency swaps and forward exchange contracts (assets) | | 11 | | | 2,594 | | | | | | | | | | | | | | | 53 | | | | 4,017 | | | | | | | | | | | | | | Currency swaps and forward exchange contracts (liabilities) | | (59 | ) | | 3,687 | | | | | | | | | | | | | | | (24 | ) | | | 3,456 | | | | | | | | | | | | | | Total currency swaps and forward exchange contracts (assets and liabilities) | | (48 | ) | | 6,281 | | 6,207 | | 42 | | 2 | | 6 | | 8 | | 16 | | | 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, 2009(€ million) | | 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 | | 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 | | — | | 748 | | — | | 748 | | | — | | | | 2,217 | | | | — | | | | 2,217 | | Cash flow hedge instruments | | — | | 136 | | — | | 136 | | | — | | | | (46 | ) | | | — | | | | (46 | ) | Net investment hedge instruments | | — | | 5 | | — | | 5 | | | — | | | | (26 | ) | | | — | | | | (26 | ) | Assets and liabilities held for trading | | — | | 28 | | — | | 28 | | | — | | | | 72 | | | | — | | | | 72 | | Assets available for sale | | 232 | | — | | — | | 232 | | | 2,575 | | | | — | | | | — | | | | 2,575 | | Total | | 232 | | 917 | | — | | 1,149 | | | 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, 2009(€ million) | | | | | | Assets/(Liabilities) | | Carrying amount | | Fair value(b) | | | 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 | | (29 | ) | | (29 | ) | | | 3 | | | | 3 | | Freight rate swaps | | — | | | — | | | | — | | | | — | | Forwards(a) | | (9 | ) | | (9 | ) | | | (16 | ) | | | (16 | ) | Options | | 21 | | | 21 | | | | (4 | ) | | | (4 | ) | Futures | | (17 | ) | | (17 | ) | | | (14 | ) | | | (14 | ) | Options on futures | | 6 | | | 6 | | | | (6 | ) | | | (6 | ) | Total crude oil, petroleum products and freight rates | | (28 | ) | | (28 | ) | | | (37 | ) | | | (37 | ) | Gas & Power activities | | | | | | | | | Swaps | | 52 | | | 52 | | | | 57 | | | | 57 | | Forwards(a) | | 78 | | | 78 | | | | 452 | | | | 452 | | Options | | 4 | | | 4 | | | | (3 | ) | | | (3 | ) | Futures | | — | | | — | | | | — | | | | — | | Total Gas & Power | | 134 | | | 134 | | | | 506 | | | | 506 | | Total | | 106 | | | 106 | | | | 469 | | | | 469 | | Total of fair value non recognized in the balance sheet | | | — | | | 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) | 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, 2008(€ million) | | | | | | ASSETS/(LIABILITIES) | | Carrying amount | | Fair value(b) | | | 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 | | 141 | | | 141 | | | | (2 | ) | | | (2 | ) | Freight rate swaps | | 8 | | | 8 | | | | — | | | | — | | Forwards(a) | | (120 | ) | | (120 | ) | | | 5 | | | | 5 | | Options | | — | | | — | | | | 51 | | | | 51 | | Futures | | 17 | | | 17 | | | | (12 | ) | | | (12 | ) | Options on futures | | (7 | ) | | (7 | ) | | | (4 | ) | | | (4 | ) | Total crude oil, petroleum products and freight rates | | 39 | | | 39 | | | | 38 | | | | 38 | | Gas & Power activities | | | | | | | | | Swaps | | (48 | ) | | (48 | ) | | | (1 | ) | | | (1 | ) | Forwards(a) | | 659 | | | 659 | | | | (102 | ) | | | (102 | ) | Options | | — | | | — | | | | 5 | | | | 5 | | Futures | | (19 | ) | | (19 | ) | | | — | | | | — | | Total Gas & Power | | 592 | | | 592 | | | | (98 | ) | | | (98 | ) | Total | | 631 | | | 631 | | | | (60 | ) | | | (60 | ) | Total of fair value non recognized in the balance sheet | | | — | | | 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) | 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, 2007(€ million) | | | | | | ASSETS/(LIABILITIES) | | Carrying amount | | Fair value(b) | | | 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 | | (149 | ) | | (149 | ) | | | (29 | ) | | | (29 | ) | Freight rate swaps | | (3 | ) | | (3 | ) | | | — | | | | — | | Forwards(a) | | (4 | ) | | (4 | ) | | | (9 | ) | | | (9 | ) | Options | | 272 | | | 272 | | | | 21 | | | | 21 | | Futures | | (97 | ) | | (97 | ) | | | (17 | ) | | | (17 | ) | Options on futures | | (1 | ) | | (1 | ) | | | 6 | | | | 6 | | Total crude oil, petroleum products and freight rates | | 18 | | | 18 | | | | (28 | ) | | | (28 | ) | Gas & Power activities | | | | | | | | | Swaps | | 4 | | | 4 | | | | 52 | | | | 52 | | Forwards(a) | | 213 | | | 213 | | | | 78 | | | | 78 | | Options | | — | | | — | | | | 4 | | | | 4 | | Futures | | 15 | | | 15 | | | | — | | | | — | | Total Gas & Power | | 232 | | | 232 | | | | 134 | | | | 134 | | Total | | 250 | | | 250 | | | | 106 | | | | 106 | | Total of fair value non recognized in the balance sheet | | | — | | | 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) | 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. |
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,(€ million) | | 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 | | 2009 | | 39 | | | 1,713 | | (1,779 | ) | | (1 | ) | | (28 | ) | 2008 | | 18 | | | 1,734 | | (1,715 | ) | | 2 | | | 39 | | 2007 | | 102 | | | 1,381 | | (1,460 | ) | | (5 | ) | | 18 | | | | | | | | Gas & Power activities | | | | | | | | | | | | | | | 2009 | | 592 | | | 327 | | (824 | ) | | 39 | | | 134 | | 2008 | | 232 | | | 787 | | (310 | ) | | (117 | ) | | 592 | | 2007 | | (79 | ) | | 489 | | (163 | ) | | (15 | ) | | 232 | |
| | | | | | | | | | | | | | | | | | | | | 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, 2009(€ million) | | 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 | | | 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 | | (45 | ) | | 17 | | | — | | (28 | ) | | | (38 | ) | | | 1 | | | | — | | | | (37 | ) | Gas & Power activities | | 140 | | | (6 | ) | | — | | 134 | | | | (44 | ) | | | 550 | | | | — | | | | 506 | | Total | | 95 | | | 11 | | | — | | 106 | | | | (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 business, the Group follows a policy of not selling its future production. However, in connection with this trading business, the Group, like most other oil companies, uses energy derivative instruments to adjust its exposure to price fluctuations of crude oil, refined products, natural gas, power and electricity.coal. The Group also uses freight rate derivative contracts in its shipping business to adjust its exposure to freight-rate fluctuations. To hedge against this risk, the Group uses various instruments such as futures, forwards, swaps and options on 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, (€ million) | | High | | Low | | Average | | Year end | 2009 | | 18.8 | | 5.8 | | 10.2 | | 7.6 | 2008 | | 13.5 | | 2.8 | | 6.9 | | 11.8 | 2007 | | 11.6 | | 3.3 | | 6.7 | | 5.4 |
| | | | | | | | | | | | | | | | | 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 business 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-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 business. Gas & Power trading:trading : value-at-risk with a 97.5% probability | | | | | | | | | As of December 31, (€ million) | | High | | Low | | Average | | Year end | 2009 | | 9.8 | | 1.9 | | 5.0 | | 4.8 | 2008 | | 16.3 | | 1.3 | | 5.0 | | 1.4 | 2007(a) | | 18.2 | | 3.2 | | 7.9 | | 4.3 |
(a) | Data takes into account historical price movements over one 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 operations and to interest rate and foreign exchange financial instruments
are managed according to rules set by the Group’s senior management, which provide for regular pooling of available cash balances, open positions and management of the financial instruments by the Treasury Department. Excess cash of the Group is deposited mainly in government institutions, or deposit banks, or major companies through deposits, reverse repurchase agreements and purchase of commercial paper. Liquidity positions and the management of financial instruments are centralized by the Treasury Department, where they are managed by a team specialized in foreign exchange and interest rate market transactions. The Cash Monitoring-Management Unit within the Treasury Department monitors limits and positions per bank on a daily basis and reports results.results of the Front Office. This unit also 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 theCredit Default Swap (CDS), its ratings with Standard & Poor’s and Moody’s, which must be of high quality, and its overall financial condition). An overall authorized credit limit is set for each bank and is allotted among the subsidiaries and the Group’s central treasury entities according to their needs. To reduce the market values risk on its commitments, in particular for swaps set as part of bonds issuance, the Treasury Department also developed a system of margin call that is gradually implemented with significant counterparties. Currency exposure The Group seeks to minimize the currency exposure of each entity to its functional currency (primarily the euro, the dollar, the Canadian dollar, the pound sterling and the Norwegian krone). For currency exposure generated by commercial activity, the hedging of revenues and costs in foreign currencies is typically performed using currency operations on the spot market and, in some cases, on the forward market. The Group rarely hedges future cash flows, although it may use options to do so. With respect to currency exposure linked to non-current assets booked in a currency other than the euro, the Group has a policy of reducing the related currency exposure by financing these assets in the same currency. Net short-term currency exposure is periodically monitored against limits set by the Group’s senior management. The non-current debt described in Note 20 to the Consolidated Financial Statements is generally raised by the corporate treasury entities either directly in dollars, in euros or euros,in Canadian dollars, or in other currencies which are then exchanged for dollars or euros through swaps issues to appropriately match general corporate needs. The proceeds from these debt issuances are loaned to affiliates whose accounts are kept in dollars, in Canadian dollars or in euros. Thus, the net sensitivity of these positions to currency exposure is not significant. The Group’s short-term currency swaps, the notional value of which appears in Note 29 to the Consolidated Financial Statements, are used to attempt to optimize the centralized cash management of the Group. Thus, the sensitivity to currency fluctuations which may be induced is likewise considered negligible. Short-term interest rate exposure and cash Cash balances, which are primarily composed of euros and dollars, are managed according to the guidelines established by the Group’s senior management (maintain an adequate level of liquidity, optimize revenue from investments considering existing interest rate yield curves, and minimize the cost of borrowing) over a less than twelve-month horizon and on the basis of a daily interest rate benchmark, primarily through short-term interest rate swaps and short-term currency swaps, without modifying currency exposure. Interest rate risk on non-current debt The Group’s policy consists of incurring non-current debt primarily at a floating rate, or, if the opportunity arises at the time of an issuance, at a fixed rate. Debt is incurred in dollars, in euros or in eurosCanadian dollars according to general corporate needs. Long-term interest rate and currency swaps may be used to hedge bonds at their issuance in order to create a variable or fixed rate synthetic debt. In order to partially modify the interest rate structure of the long-term debt, TOTAL may also enter into long-term interest rate swaps.
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, 2009, 20082011, 2010 and 2007.2009. | | | | | | | | | | | | | | | | | | | | | 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, 2009(€ million) | | | | | Bonds (non-current portion, before swaps) | | (18,368 | ) | | (18,368 | ) | | 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 | | | — | | | — | |
| | | | | | | | | | | | | | | | | | | | | 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(€ million) | | | | | Bonds (non-current portion, before swaps) | | (14,119 | ) | | (14,119 | ) | | 47 | | | (43 | ) | Swaps hedging fixed-rates bonds (liabilities) | | (440 | ) | | (440 | ) | | | | | | | Swaps hedging fixed-rates bonds (assets) | | 892 | | | 892 | | | | | | | | Total swaps hedging fixed-rates bonds (assets and liabilities) | | 452 | | | 452 | | | (44 | ) | | 44 | | Current portion of non-current debt after swap (excluding capital lease obligations) | | (2,025 | ) | | (2,025 | ) | | 3 | | | (3 | ) | Other interest rates swaps | | (4 | ) | | (4 | ) | | 1 | | | (1 | ) | Currency swaps and forward exchange contracts | | (56 | ) | | (56 | ) | | — | | | — | |
| | | | | | Change in fair value due to a change in interest rate by | | | | | | | | 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, 2007(€ million) | | | | 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) | | (11,741 | ) | | (11,741 | ) | | 37 | | | (37 | ) | | | (21,402 | ) | | | (22,092 | ) | | | 83 | | | | (83 | ) | Swaps hedging fixed-rates bonds (liabilities) | | (369 | ) | | (369 | ) | | | | | | | (146 | ) | | | (146 | ) | | | | | Swaps hedging fixed-rates bonds (assets) | | 460 | | | 460 | | | | | | | | 1,976 | | | | 1,976 | | | | | | Total swaps hedging fixed-rates bonds (assets and liabilities) | | 91 | | | 91 | | | (39 | ) | | 38 | | | | 1,830 | | | | 1,830 | | | | (49 | ) | | | 49 | | Current portion of non-current debt after swap (excluding capital lease obligations) | | (1,669 | ) | | (1,669 | ) | | (1 | ) | | 1 | | | | 3,488 | | | | 3,488 | | | | 3 | | | | (3 | ) | Other interest rates swaps | | 1 | | | 1 | | | — | | | — | | | | (1 | ) | | | (1 | ) | | | 3 | | | | (3 | ) | Currency swaps and forward exchange contracts | | (34 | ) | | (34 | ) | | — | | | — | | | | 47 | | | | 47 | | | | — | | | | — | | As of December 31, 2010 | | | | Bonds (non-current portion, before swaps) | | | | (20,019 | ) | | | (20,408 | ) | | | 86 | | | | (84 | ) | Swaps hedging fixed-rates bonds (liabilities) | | | | (178 | ) | | | (178 | ) | | | | | Swaps hedging fixed-rates bonds (assets) | | | | 1,870 | | | | 1,870 | | | | | | Total swaps hedging fixed-rates bonds (assets and liabilities) | | | | 1,692 | | | | 1,692 | | | | (59 | ) | | | 59 | | Current portion of non-current debt after swap (excluding capital lease obligations) | | | | 3,483 | | | | 3,483 | | | | 4 | | | | (4 | ) | Other interest rates swaps | | | | (2 | ) | | | (2 | ) | | | 3 | | | | (3 | ) | Currency swaps and forward exchange contracts | | | | (101 | ) | | | (101 | ) | | | — | | | | — | | As of December 31, 2009 | | | | Bonds (non-current portion, before swaps) | | | | (18,368 | ) | | | (18,836 | ) | | | 75 | | | | (75 | ) | Swaps hedging fixed-rates bonds (liabilities) | | | | (241 | ) | | | (241 | ) | | | | | Swaps hedging fixed-rates bonds (assets) | | | | 1,025 | | | | 1,025 | | | | | | Total swaps hedging fixed-rates bonds (assets and liabilities) | | | | 784 | | | | 784 | | | | (57 | ) | | | 57 | | Current portion of non-current debt after swap (excluding capital lease obligations) | | | | (2,111 | ) | | | (2,111 | ) | | | 3 | | | | (3 | ) | Other interest rates swaps | | | | (1 | ) | | | (1 | ) | | | 1 | | | | (1 | ) | Currency swaps and forward exchange contracts | | | | 34 | | | | 34 | | | | — | | | | — | |
The impact of changes in interest rates on the cost of net debt before tax is as follows: | | | | | | | | | | For the year ended December 31,(€ million) | | 2009 | | | 2008 | | | 2007 | | Cost of net debt | | (398 | ) | | (527 | ) | | (539 | ) | Interest rate translation of + 10 basis points | | (11 | ) | | (11 | ) | | (12 | ) | Interest rate translation of - 10 basis points | | 11 | | | 11 | | | 12 | | Interest rate translation of + 100 basis points | | (108 | ) | | (113 | ) | | (116 | ) | Interest rate translation of - 100 basis points | | 108 | | | 113 | | | 116 | |
| | | | | | | | | | | | | For the year ended December 31, (M€) | | 2011 | | | 2010 | | | 2009 | | Cost of net debt | | | (440 | ) | | | (334 | ) | | | (398 | ) | Interest rate translation of : | | | | | | | | | | | | | + 10 basis points | | | (10 | ) | | | (11 | ) | | | (11 | ) | - 10 basis points | | | 10 | | | | 11 | | | | 11 | | + 100 basis points | | | (103 | ) | | | (107 | ) | | | (108 | ) | - 100 basis points | | | 103 | | | | 107 | | | | 108 | |
As a result of the policy for the management of currency exposure previously described, the Group’s sensitivity to currency exposure is primarily influenced by the net equity of the subsidiaries whose functional currency is the dollar and, to a lesser extent, the pound sterling, the Norwegian krone and the Norwegian krone.Canadian dollar. This sensitivity is reflected in the historical evolution of the currency translation adjustment recorded in the statement of changes in shareholders’ equity which, in the course of the last three fiscal years, is essentially related to the fluctuation of dollar and pound sterling and is set forth in the table below:
| | | | | | | Euro / Dollar exchange rates | | Euro / Pound sterling exchange rates | As of December 31, 2009 | | 1.44 | | 0.89 | As of December 31, 2008 | | 1.39 | | 0.95 | As of December 31, 2007 | | 1.47 | | 0.73 |
| | | | | | | | | | | 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, 2009(€ million) | | 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 | | | | 69,025 | | | | 41,396 | | | | 21,728 | | | | 4,713 | | | | 1,188 | | Currency translation adjustment before net investment hedge | | | | (962 | ) | | | | | 127 | | | | (923 | ) | | | (166 | ) | Net investment hedge — open instruments | | | | (26 | ) | | | | | (25 | ) | | | (1 | ) | | | — | | Shareholders’ equity at exchange rate as of December 31, 2011 | | | | 68,037 | | | | 41,396 | | | | 21,830 | | | | 3,789 | | | | 1,022 | | | | | As of December 31, 2010 (M€) | | | Total | | Euro | | | Dollar | | Pound sterling | | Other currencies and equity affiliates(a) | | Shareholders’ equity at historical exchange rate | | | | 62,909 | | | | 32,894 | | | | 22,242 | | | | 4,997 | | | | 2,776 | | Currency translation adjustment before net investment hedge | | | | (2,501 | ) | | | — | | | | (1,237 | ) | | | (1,274 | ) | | | 10 | | Net investment hedge — open instruments | | | | 6 | | | | — | | | | 6 | | | | — | | | | — | | Shareholders’ equity at exchange rate as of December 31, 2010 | | | | 60,414 | | | | 32,894 | | | | 21,011 | | | | 3,723 | | | | 2,786 | | | As of December 31, 2009 (M€) | | | Total | | Euro | | | Dollar | | Pound sterling | | Other currencies and equity affiliates | | Shareholders’ equity at historical exchange rate | | 57,621 | | | 27,717 | | 18,671 | | | 5,201 | | | 6,032 | | | | 57,621 | | | | 27,717 | | | | 18,671 | | | | 5,201 | | | | 6,032 | | Currency translation adjustment before net investment hedge | | (5,074 | ) | | | | (3,027 | ) | | (1,465 | ) | | (582 | ) | | | (5,074 | ) | | | — | | | | (3,027 | ) | | | (1,465 | ) | | | (582 | ) | Net investment hedge — open instruments | | 5 | | | | | 6 | | | (1 | ) | | | | | 5 | | | | — | | | | 6 | | | | (1 | ) | | | — | | Shareholders’ equity at exchange rate as of December 31, 2009 | | 52,552 | | | 27,717 | | 15,650 | | | 3,735 | | | 5,450 | | | | 52,552 | | | | 27,717 | | | | 15,650 | | | | 3,735 | | | | 5,450 | | | | | | | | | | | | | | As of December 31, 2008(€ million) | | Total | | Euro | | Dollar | | Pound sterling | | Other currencies and equity affiliates | | | Shareholders’ equity at historical exchange rate | | 53,868 | | | 25,084 | | 15,429 | | | 5,587 | | | 7,768 | | | Currency translation adjustment before net investment hedge | | (4,876 | ) | | — | | (2,191 | ) | | (1,769 | ) | | (916 | ) | | Net investment hedge — open instruments | | — | | | — | | — | | | — | | | — | | | Shareholders’ equity at exchange rate as of December 31, 2008 | | 48,992 | | | 25,084 | | 13,238 | | | 3,818 | | | 6,852 | | | | | | | | | | | | | | | As of December 31, 2007(€ million) | | Total | | Euro | | Dollar | | Pound sterling | | Other currencies and equity affiliates | | | Shareholders’ equity at historical exchange rate | | 49,254 | | | 22,214 | | 12,954 | | | 5,477 | | | 8,609 | | | Currency translation adjustment before net investment hedge | | (4,410 | ) | | — | | (3,501 | ) | | (289 | ) | | (620 | ) | | Net investment hedge — open instruments | | 14 | | | — | | 14 | | | — | | | — | | | Shareholders’ equity at exchange rate as of December 31, 2007 | | 44,858 | | | 22,214 | | 9,467 | | | 5,188 | | | 7,989 | | |
(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 years despite the considerable fluctuation of the dollar (loss(gain of€118 million in 2011, nil result in 2010, loss of€32 million in 2009, gain of€112 million in 2008, gain of€35 million in 2007)2009). Stock market risk The Group holds interests in a number of publicly-traded companies (see Notes 12 and 13 to the Consolidated Financial Statements). The market value of these holdings fluctuates due to various factors, including stock market trends, valuations of the sectors in which the companies operate, and the economic and financial condition of each individual company. Liquidity risk TOTAL S.A. has confirmed lines of credit granted by international banks, which are calculated to allow it to manage its short-term liquidity needs as required. As of December 31, 2009,2011, these lines of credit amounted to $9,322$10,139 million, of which $9,289$10,096 million were was unused. The agreements for the lines of credit granted to TOTAL S.A. do not contain conditions related to the Company’s financial ratios, to its financial ratings from specialized agencies, or to the occurrence of events that could have a material adverse effect on its financial position. As of December 31, 2009,2011, the aggregate amount of the principal confirmed lines of credit granted by international banks to Group companies, including TOTAL S.A., was $10,084$11,447 million, of which $10,051$11,154 million werewas 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, 2009, 20082011, 2010 and 20072009 (see Note 20 to the Consolidated Financial Statements).
| | | | | | | | | | | | | ASSETS/(LIABILITIES) As of December 31, 2009(€ million) | | Less than one year | | | Between 1 year and 5 years | | | More than 5 years | | | Total | | Non-current financial debt (notional value excluding interests) | | | | | (12,589 | ) | | (5,823 | ) | | (18,412 | ) | Current borrowings | | (6,994 | ) | | | | | | | | (6,994 | ) | Other current financial liabilities | | (123 | ) | | | | | | | | (123 | ) | Current financial assets | | 311 | | | | | | | | | 311 | | Cash and cash equivalents | | 11,662 | | | | | | | | | 11,662 | | Net amount before financial expense | | 4,856 | | | (12,589 | ) | | (5,823 | ) | | (13,556 | ) | Financial expense on non-current financial debt | | (768 | ) | | (2,007 | ) | | (1,112 | ) | | (3,887 | ) | Interest differential on swaps | | 447 | | | 342 | | | (55 | ) | | 734 | | Net amount | | 4,535 | | | (14,254 | ) | | (6,990 | ) | | (16,709 | ) | | | | | | | | | | | | | | As of December 31, 2008(€ million) | | Less than one year | | | Between 1 year and 5 years | | | More than 5 years | | | Total | | Non-current financial debt (notional value excluding interests) | | | | | (13,206 | ) | | (2,093 | ) | | (15,299 | ) | Current borrowings | | (7,722 | ) | | | | | | | | (7,722 | ) | Other current financial liabilities | | (158 | ) | | | | | | | | (158 | ) | Current financial assets | | 187 | | | | | | | | | 187 | | Cash and cash equivalents | | 12,321 | | | | | | | | | 12,321 | | Net amount before financial expense | | 4,628 | | | (13,206 | ) | | (2,093 | ) | | (10,671 | ) | Financial expense on non-current financial debt | | (554 | ) | | (1,431 | ) | | (174 | ) | | (2,159 | ) | Interest differential on swaps | | 118 | | | 410 | | | (7 | ) | | 521 | | Net amount | | 4,192 | | | (14,227 | ) | | (2,274 | ) | | (12,309 | ) | | | | | | | | | | | | | | As of December 31, 2007(€ million) | | Less than one year | | | Between 1 year and 5 years | | | More than 5 years | | | Total | | Non-current financial debt (notional value excluding interests) | | | | | (11,424 | ) | | (2,992 | ) | | (14,416 | ) | Current borrowings | | (4,613 | ) | | | | | | | | (4,613 | ) | Other current financial liabilities | | (60 | ) | | | | | | | | (60 | ) | Current financial assets | | 1,264 | | | | | | | | | 1,264 | | Cash and cash equivalents | | 5,988 | | | | | | | | | 5,988 | | Net amount before financial expense | | 2,579 | | | (11,424 | ) | | (2,992 | ) | | (11,837 | ) | Financial expense on non-current financial debt | | (532 | ) | | (1,309 | ) | | (226 | ) | | (2,067 | ) | Interest differential on swaps | | (29 | ) | | (80 | ) | | (44 | ) | | (153 | ) | Net amount | | 2,018 | | | (12,813 | ) | | (3,262 | ) | | (14,057 | ) |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | As of December 31, 2011 (M€) Assets/(Liabilities) | | Less than one year | | | 1-2 years | | | 2-3 years | | | 3-4 years | | | 4-5 years | | | More than 5 years | | | Total | | Non-current financial debt (notional value excluding interests) | | | | | | | (4,492 | ) | | | (3,630 | ) | | | (3,614 | ) | | | (1,519 | ) | | | (7,326 | ) | | | (20,581 | ) | Current borrowings | | | (9,675 | ) | | | | | | | | | | | | | | | | | | | | | | | (9,675 | ) | Other current financial liabilities | | | (167 | ) | | | | | | | | | | | | | | | | | | | | | | | (167 | ) | Current financial assets | | | 700 | | | | | | | | | | | | | | | | | | | | | | | | 700 | | Cash and cash equivalents | | | 14,025 | | | | | | | | | | | | | | | | | | | | | | | | 14,025 | | Net amount before financial expense | | | 4,883 | | | | (4,492 | ) | | | (3,630 | ) | | | (3,614 | ) | | | (1,519 | ) | | | (7,326 | ) | | | (15,698 | ) | Financial expense on non-current financial debt | | | (785 | ) | | | (691 | ) | | | (521 | ) | | | (417 | ) | | | (302 | ) | | | (1,075 | ) | | | (3,791 | ) | Interest differential on swaps | | | 320 | | | | 331 | | | | 221 | | | | 120 | | | | 55 | | | | 44 | | | | 1,091 | | Net amount | | | 4,418 | | | | (4,852 | ) | | | (3,930 | ) | | | (3,911 | ) | | | (1,766 | ) | | | (8,357 | ) | | | (18,398 | ) | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | As of December 31, 2010 (M€) Assets/(Liabilities) | | Less than one year | | | 1-2 years | | | 2-3 years | | | 3-4 years | | | 4-5 years | | | More than 5 years | | | Total | | Non-current financial debt (notional value excluding interests) | | | | | | | (3,355 | ) | | | (3,544 | ) | | | (2,218 | ) | | | (3,404 | ) | | | (6,392 | ) | | | (18,913 | ) | Current borrowings | | | (9,653 | ) | | | | | | | | | | | | | | | | | | | | | | | (9,653 | ) | Other current financial liabilities | | | (159 | ) | | | | | | | | | | | | | | | | | | | | | | | (159 | ) | Current financial assets | | | 1,205 | | | | | | | | | | | | | | | | | | | | | | | | 1,205 | | Cash and cash equivalents | | | 14,489 | | | | | | | | | | | | | | | | | | | | | | | | 14,489 | | Net amount before financial expense | | | 5,882 | | | | (3,355 | ) | | | (3,544 | ) | | | (2,218 | ) | | | (3,404 | ) | | | (6,392 | ) | | | (13,031 | ) | Financial expense on non-current financial debt | | | (843 | ) | | | (729 | ) | | | (605 | ) | | | (450 | ) | | | (358 | ) | | | (1,195 | ) | | | (4,180 | ) | Interest differential on swaps | | | 461 | | | | 334 | | | | 153 | | | | 33 | | | | 2 | | | | (78 | ) | | | 905 | | Net amount | | | 5,500 | | | | (3,750 | ) | | | (3,996 | ) | | | (2,635 | ) | | | (3,760 | ) | | | (7,665 | ) | | | (16,306 | ) | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | As of December 31, 2009 (M€) Assets/(Liabilities) | | Less than one year | | | 1-2 years | | | 2-3 years | | | 3-4 years | | | 4-5 years | | | More than 5 years | | | Total | | Non-current financial debt (notional value excluding interests) | | | | | | | (3,658 | ) | | | (3,277 | ) | | | (3,545 | ) | | | (2,109 | ) | | | (5,823 | ) | | | (18,412 | ) | Current borrowings | | | (6,994 | ) | | | | | | | | | | | | | | | | | | | | | | | (6,994 | ) | Other current financial liabilities | | | (123 | ) | | | | | | | | | | | | | | | | | | | | | | | (123 | ) | Current financial assets | | | 311 | | | | | | | | | | | | | | | | | | | | | | | | 311 | | Cash and cash equivalents | | | 11,662 | | | | | | | | | | | | | | | | | | | | | | | | 11,662 | | Net amount before financial expense | | | 4,856 | | | | (3,658 | ) | | | (3,277 | ) | | | (3,545 | ) | | | (2,109 | ) | | | (5,823 | ) | | | (13,556 | ) | Financial expense on non-current financial debt | | | (768 | ) | | | (697 | ) | | | (561 | ) | | | (448 | ) | | | (301 | ) | | | (1,112 | ) | | | (3,887 | ) | Interest differential on swaps | | | 447 | | | | 233 | | | | 100 | | | | 25 | | | | (16 | ) | | | (55 | ) | | | 734 | | Net amount | | | 4,535 | | | | (4,122 | ) | | | (3,738 | ) | | | (3,968 | ) | | | (2,426 | ) | | | (6,990 | ) | | | (16,709 | ) |
In addition, the Group guarantees bank debt and finance lease obligations of certain non-consolidated companies and equity affiliates. A payment would be triggered by failure of the guaranteed party to fulfill its obligation covered by the guarantee, and no assets are held as collateral for these guarantees. Maturity dates and amounts are set forth in Note 23 to the Consolidated Financial Statements (“Guarantees given against borrowings”). The Group also guarantees the current liabilities of certain non-consolidated companies. Performance under these guarantees would be triggered by a financial default of these entities. Maturity dates and amounts are set forth in Note 23 to the Consolidated Financial Statements (“Guarantees of current liabilities”). The following table sets forth financial assets and liabilities related to operating activities as of December 31, 2009, 20082011, 2010 and 20072009 (see Note 28 to the Consolidated Financial Statements). | As of December 31 (€ million) | | | | | | | | ASSETS/(LIABILITIES) | | 2009 | | 2008 | | 2007 | | | As of December 31 (M€) Assets/(Liabilities) | | | 2011 | | 2010 | | 2009 | | Accounts payable | | (15,383 | ) | | (14,815 | ) | | (18,183 | ) | | | (22,086 | ) | | | (18,450 | ) | | | (15,383 | ) | Other operating liabilities | | (4,706 | ) | | (4,297 | ) | | (3,900 | ) | | | (5,441 | ) | | | (3,574 | ) | | | (4,706 | ) | including financial instruments related to commodity contracts | | (923 | ) | | (1,033 | ) | | (733 | ) | | | (606 | ) | | | (559 | ) | | | (923 | ) | Accounts receivable, net | | 15,719 | | | 15,287 | | | 19,129 | | | | 20,049 | | | | 18,159 | | | | 15,719 | | Other operating receivables | | 5,145 | | | 6,208 | | | 4,430 | | | | 7,467 | | | | 4,407 | | | | 5,145 | | including financial instruments related to commodity contracts | | 1,029 | | | 1,664 | | | 983 | | | | 1,074 | | | | 499 | | | | 1,029 | | Total | | 775 | | | 2,383 | | | 1,476 | | | | (11 | ) | | | 542 | | | | 775 | |
These financial assets and liabilities mainly have a maturity date below one year. Credit risk Credit risk is defined as the risk of the counterparty to a contract failing to perform or pay the amounts due. The Group is exposed to credit risks in its operating and financing activities. The Group’s maximum exposure to credit risk is partially related to financial assets recorded on its balance sheet, including energy derivative instruments that have a positive market value. The following table presents the Group’s maximum credit risk exposure: | As of December 31, (€ million) | | | Assets/(Liabilities) | | 2009 | | 2008 | | 2007 | | As of December 31, (M€) Assets/ (Liabilities) | | | 2011 | | 2010 | | 2009 | | Loans to equity affiliates (Note 12) | | 2,367 | | 2,005 | | 2,575 | | | 2,246 | | | | 2,383 | | | | 2,367 | | Loans and advances (Note 14) | | 1,284 | | 1,403 | | 851 | | | 2,055 | | | | 1,596 | | | | 1,284 | | Hedging instruments of non-current financial debt(Note 20) | | 1,025 | | 892 | | 460 | | | 1,976 | | | | 1,870 | | | | 1,025 | | Accounts receivable (Note 16) | | 15,719 | | 15,287 | | 19,129 | | | 20,049 | | | | 18,159 | | | | 15,719 | | Other operating receivables (Note 16) | | 5,145 | | 6,208 | | 4,430 | | | 7,467 | | | | 4,407 | | | | 5,145 | | Current financial assets (Note 20) | | 311 | | 187 | | 1,264 | | | 700 | | | | 1,205 | | | | 311 | | Cash and cash equivalents (Note 27) | | 11,662 | | 12,321 | | 5,988 | | | 14,025 | | | | 14,489 | | | | 11,662 | | Total | | 37,513 | | 38,303 | | 34,697 | | | 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, 2009,2011, the net amount paid or received as part of these margin calls was€1,682 million (against€1,560 million as of December 31, 2010 and€693 million.million as of December 31, 2009). Credit risk is managed by the Group’s business segments as follows: | - | 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. 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 requiring added security in case of adverse change in the counterparty risk, and allow for termination of the contract upon occurrence of certain events of default. Downstream SegmentRefining & 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 deals with commercial counterparties and financial institutions located throughout the world. Counterparties to physical and derivative transactions are primarily entities involved in the oil and gas industry or in the trading of energy commodities, or financial institutions. Credit risk coverage is concluded with financial institutions, international banks and insurance groups selected in accordance with strict criteria. The Trading & Shipping division has a strict policy of internal delegation of authority governing establishment of country and counterparty credit limits and approval of specific transactions. Credit exposures contracted under these limits and approvals are monitored on a daily basis. Potential counterparties are subject to credit assessment and approval prior to any transaction being concluded and all active counterparties are subject to regular reviews, including re-appraisal and approval of granted limits. The creditworthiness of counterparties is assessed based on an analysis of quantitative and qualitative data regarding financial standing and business risks, together with the review of any relevant third party and market information, such as ratings published by Standard & Poor’s, Moody’s Investors Service and other agencies. Contractual arrangements are structured so as to maximize the risk mitigation benefits of netting between transactions wherever possible and additional protective terms providing for the provision of security in the event of financial deterioration and the termination of transactions on the occurrence of defined default events are used to the greatest permitted extent. Credit risks in excess of approved levels are secured by means of letters of credit and other guarantees, cash deposits and insurance arrangements. In respect of derivative transactions, risks are secured by margin call contracts wherever possible. 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 position or operations of the Group. The contingent commitments and contractual obligations are detailed in note 23 to the consolidated financial statement. ANTITRUST INVESTIGATIONS 1. Following investigations into certain commercial practicesThe principal antitrust proceedings in which the chemicals industry in the United States, some subsidiaries of the Arkema(1) group have beenGroup’s companies are involved in criminal investigations, closed as of today, and civil liability lawsuits in the United States for violations of antitrust laws. TOTAL S.A. has been named in certain of these suits as the parent company.are described hereafter.
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 million and jointly fined Arkema and Elf Aquitaine€45 million. The appeal from Arkema and Elf Aquitaine before the Court of First Instance of the European Union has been rejected on September 30, 2009. A recourse before the Court of Justice of the European Communities has been filed.
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 million and€219.1 million, as a result of, respectively, each of these two proceedings. Elf Aquitaine was held jointly and severally liable for, respectively,€65.1 million and€181.35 million of these fines while TOTAL S.A. was held jointly and severally liable, respectively, for€42 million and€140.4 million. TOTAL S.A., Arkema and Elf Aquitaine have appealed these decisions to the Court of First Instance of the European Union.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. |
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, in June 2008, Arkema and Elf Aquitaine have been jointly and severally fined in an amount of€22.7 million and individually in an amount of€20.43 million for Arkema and€15.89 million 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. The decision has been rendered by the Commission in November 2009. The companies have been jointly and severally fined in an amount of€11 million and individually in an amount of€9.92 million for Arkema and€7.71 million for Elf Aquitaine. The concerned companies will appeal 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 anticompetitionanti-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. (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. |
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 anyhas 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 company for 10%in its configuration prior to the spin-off an overall amount of any amount that€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(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 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 any Group companysupreme 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 under anyin accordance with the decision concerning the last proceeding referred hereinabove, the evolution of the proceedings coveredduring 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 financial impacts of these guarantees.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. 3. The Group has recorded provisions amounting toWithin the framework of all of the legal proceedings described above, a€4317 million reserve remains booked in itsthe Group’s consolidated financial statements as of December 31, 2009 to cover the risks mentioned above.2011.
4. Moreover, asDownstream
Pursuant to a resultstatement of investigations startedobjections received by the European Commission in October 2002 concerning certain Refining & Marketing subsidiaries of the Group, Total Nederland N.V. and TOTAL S.A. received(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 in October 2004. These proceedings resulted, in September 2006, inreceived by Total Nederland N.V. being fined€20.25 million and in TOTAL S.A. as its parent company being held jointly responsible for€13.5 million of this amount, although no facts implicating TOTAL S.A. in the practices under investigation were alleged. TOTAL S.A. andRaffinage Marketing (formerly Total Nederland N.V. have appealed this decision to the Court of First Instance of the European Union. In addition, in May 2007, Total FranceFrance) and TOTAL S.A. received a statement of objectionsfrom the European Commission regarding alleged antitrust practices concerning another product line of the Refining & Marketing division. These proceedings resulted, in October 2008, indivision, Total France beingRaffinage Marketing was fined€128.2 million in 2008, which has been paid, and infor which TOTAL S.A., as its parent company, being was held jointly responsible although no facts implicatingliable based on its status as parent company. TOTAL S.A. inalso appealed this decision before the practices under investigation were alleged.relevant court and this appeal is still pending.
In addition, civil proceedings against TOTAL S.A.S.A and Total Raffinage Marketing (the new corporate nameand 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 Total France) have appealed this decisionthese procedures are uncertain due to the Courtnumber of First Instancelegal difficulties they gave rise to, the lack of documented claims and evaluations of the European Union.alleged damages. Furthermore, in July 2009,Within the French antitrust Authority sent to TotalGaz and Total Raffinage Marketing a statement of objections regarding alleged antitrust practices concerning another product lineframework of the Refining & Marketing division.legal proceedings described above, a€30 million reserve is booked in the Group’s consolidated financial statements as of December 31, 2011.
5. GivenWhatever the discretionary powers granted to antitrust Authorities for determining fines, it is not currently possible to determine with certaintyevolution of the ultimate 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 outcome of these 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. 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 the BritishTOTAL’s UK subsidiary of TOTAL responsibleliable for the accident and solely liable for indemnifying the victims. TOTAL’s BritishThe subsidiary has appealed thisthe decision. The appeal trial took place in January 2010 and2010. The Court of Appeals, by a decision is expected duringhanded down on March 4, 2010, confirmed the first-half 2010. With respectprior judgment. The Supreme Court of United Kingdom has partially authorized TOTAL’s UK subsidiary to civil liabilitycontest the provision recordeddecision. TOTAL’s UK subsidiary finally decided to withdraw from this recourse due to settlement agreements reached in the Group’s consolidated financial statements as of December 31, 2009 amounts to
€ 295 million after payments already completed.mid-February 2011.
The Group carries insurance for damage to its interests in these facilities, business interruption and civil liability claims from third parties. The residual amount to be received from insurers amounts to€ 211 millionprovision for the civil liability that appears in the Group’s consolidated financial statements as of December 31, 2009.2011, 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 of TOTAL. In November 2009, the British subsidiary of TOTAL, pleaded guilty to charges brought by the prosecutionwas fined £3.6 million and intends to claim/raise,paid it. The decision takes into this framework,account a number of elements likely to mitigatethat have mitigated the impact of the charges brought against it.
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 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. To date, forty-oneCourt. Forty-two third parties have received compensation payments, representingbeen compensated for an aggregate amount of€171.5 million. The appealBy a decision dated March 30, 2010, the Court of Appeal of Paris upheld the lower Court verdict pursuant to which TOTAL S.A. was heard endconvicted of 2009marine 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 Paris. The decisionParis to third parties against Erika’s controlling and classification firm, the ship-owner and the ship-manager, a global settlement agreement was signed late 2011 between these parties and TOTAL S.A. under the auspices of the Court is expected duringIOPC Fund. Under this global settlement agreement, each party agreed to the first-half 2010.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 20092011 amounted to€650776 million (€612715 million in 20082010 and€594650 million in 2007)2009), corresponding to 0.5%0.4% of the sales. The staff dedicated in 20092011 to these research and development activities are estimated at 3,946 people (4,087 in 2010 and 4,016 people (4,285 in 2008 and 4,216 in 2007)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€1,871 million in 2009 (€3,301 million in 2008 and€2,505 million in 2007).
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, 2009,2011, 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/acquired emission rightsbrackets. This chart of legal detentions is not exhaustive and emissions fordoes not reflect neither the year 2009. 34) POST-CLOSING EVENTS
A) DEVALUATION OF THE BOLIVAR
In January 2010,operational structure nor the President of Venezuela announced a devaluation of the Bolivar and the establishment of a dual exchange rate. Subsidiariesrelative economic size of the Group in this country operate mostly inentities and the Upstream segment and are dollar functional currency entities. In this context, the devaluation of the Bolivar should not have any material effect on the Group’s consolidated balance sheet, statement of income and shareholders’ equity.
B) CREATION OF TOTALERG
On January 27, 2010, TOTAL and ERG signed an agreement to create a joint venture in the Italian marketing and refining business. The shareholder pact calls for joint governance as well as operating independence for the new entity. TOTAL and ERG will hold equity stakes of, respectively, 49% and 51%. Created through the merger of TOTAL Italia and ERG Petroli, the joint venture will be called “TotalErg” and will operate under both the TOTAL and ERG brands. TotalErg will become one of the largest marketing operators in Italy, with a retail market share of nearly 13% and over 3,400 service stations. The joint venture will also be active in the refining business with a total capacity of around 8% of national demand. The transaction will be submitted to competition authorities for approval. Until then, TOTAL Italia and ERG Petroli will remain as separate, competing entities.segments.
35) CONSOLIDATION SCOPE
TOTAL SUPPLEMENTAL OIL AND GAS INFORMATION (Unaudited) New rules
TheAs 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 StandardsStandard Board (FASB) Accounting Standards Update regarding Extractive Activities – OilActivities-Oil and Gas (ASC 932) change a number of reserves estimation and disclosure requirements. InAs 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 traditionalnon-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 and their application resulted in an immaterial increase in TOTAL’s proved reserves. In particular, positive revisions were made possible in 2009 on a limited number of proved properties due to the integration of reliable technologies such as seismic and wireline pressure data in the proved reserves evaluation workflow. These revisions represent less than 2% of the Group’s proved reserves portfolio. Bitumen was included in 2008 and 2007 in the crude oil reserves and is disclosed separately for 2009 pursuant to the SEC requirements, as amended.
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 involvesrelies on a ReservoirTechnical Reserves Committee that is responsible for approving proved reserves changes above a certain threshold and technical evaluations of reserves associated with any investment decision that requires approval from the Exploration & Production Executive Committee. The Chairman of the ReservoirTechnical Reserves Committee and its members areis appointed by the PresidentSenior Management of Exploration & Production and its members represent expertise in reservoir engineering, production geology, production geophysics, drilling, and pre-development projects.development studies. An internal control process related to reserves estimation is well established within TOTAL and involves the following elements: A central Reserve Entity whose responsibility is:is to consolidate, document and archive the Group’s reserves; to ensure coherencycoherence 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. | | 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 Geoscience Reserve ManagerReserves Vice-president and composed of at least three ReservoirTechnical 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 GeoscienceDevelopment Division, aan SEC Reserves Committee chaired by the Exploration & Production Finance Senior Vice President and comprised of the Geoscience,Development, Exploration, Strategy and Legal Senior Vice Presidents, or their representatives, as well as the Chairman of the ReservoirTechnical Reserves Committee and the Geoscience Reserves Manager,Vice-President, approves the SEC reserve booking proposals as regards toregarding criteria that are not dependingdependent upon reservoir and geosciencegeosciences 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 GroupGroup’s internal auditors who verify the effectiveness of the reserves evaluation process and control procedures. The Geosciences Reserves Manager (GRM)Vice-President (RVP) is the technical person responsible for preparing the reserves estimates for the Group. The GRMAppointed by the President of Exploration & Production, the RVP supervises the Reserve Entity, chairs the annual review of reserves, and is a member of the ReservoirTechnical Reserves Committee and the SEC Reserves Committee. The GRMRVP has a solid backgroundover thirty years of experience in the fields ofoil & gas industry. He previously held several management positions in the Group in reservoir engineering and geosciences, a strongand has more than fifteen years of experience in the field of reservereserves evaluation audit and control processesprocess. He holds an engineering degree from Institut National des Sciences Appliquées, Lyon, France, and a good knowledge in economicspetroleum engineering degree from Ecole Nationale Supérieure du Pétrole et des Moteurs (IFP School), France. He is a past member and finance.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 year-endthe 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 proved reserves. At the end of 2008, proved developed reserves were 5,243 Mboe and represented 50% of proved reserves. Over the past three years, the level of proved developed reserves has remained above 5.25.7 Bboe and over 50%53% of proved reserves, illustrating TOTAL’s ability to consistently transfer proved undeveloped reserves into developed status. Proved undeveloped reserves As of December 31, 2009,2011, TOTAL’s combined proved undeveloped reserves of oil and gas were 4,6485,377 Mboe as compared to 5,2154,987 Mboe at the end of 2008.2010. The reductionnet increase of 390 Mboe of proved undeveloped reserves reflects primarilyis due to the progress made in convertingaddition 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 intoto proved developed reserves in particular withreserves. In 2011, the successful production start up of large projects in Nigeria, Angola, United States, Qatar and Yemen. The reduction ofcosts incurred to develop proved undeveloped reserves associated with(PUDs) was€10.2 billion, which represents 84% of 2011 development costs incurred, and was related to projects located for the transfer into developed reserves has been partially offset bymost part in Angola, Australia, Canada, Kazakhstan, Nigeria, Norway, United Kingdom and Russia.
Approximately 57% of the addition of undeveloped reserves mainly in Canada and Argentina. More than 60% of theGroup’s proved undeveloped reserves are associated with producing fieldsprojects and are
located for the most part in Angola, Canada, Nigeria, Yemen, UAE, VenezuelaNorway, and Norway.Venezuela. These reserves are expected to be developed over time as part of initial field development plans or additional development phases. The timing to bring these proved reserves into production will depend upon several factors including reservoir performance, surface facilities or plant capacity constraints and contractual limitations on production level. The remaining proved undeveloped reserves correspond to undeveloped fields or assets for which a development has been sanctioned or is in progress. These proved undeveloped reserves are located primarily in Kazakhstan, Angola The Group’s portfolio of projects includes a few large scale and Nigeria. For some of the majorcomplex developments we anticipatefor which it anticipates that it may take more than five years from the time of recording proved reserves to the start of productionproduction. 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 complexitynature of the reservoir rock and fluid properties, challenging operating environments and the size of the projects. Development costs In addition, some of these projects are generally designed and optimized for a given production capacity that controls the year 2009 were€8.1 billion. A large partpace at which the field is developed and the wells are drilled. At production start-up, only a portion of the investments was allocatedproved reserves are developed in order to majordeliver 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 Kazakhstan, Angola,Venezuela and LNG projects in Qatar, Yemen, Nigeria United States, Qatar and Yemen and contributed to convert proved undeveloped reserves into proved developed reserves.Indonesia.
Information shown in the following tables is presented in accordance with the FASB’s ASC 932 and the requirements of the SEC Regulation S-K (Items 1200 to 1208). The tables included provided below are presented by the following geographic areas: Europe, Africa, the Americas, Middle East and Asia (including CIS). Certain previously reported amounts for 2008 and 2007 have been reclassified to conform to the current year presentation. ESTIMATED PROVED RESERVES OF OIL, BITUMEN AND GAS RESERVES The following tables present, for oil, bitumen and gas reserves, an estimate of the Group’s oil, bitumen and gas quantities by geographic areas as of December 31, 2009, 20082011, 2010 and 2007. 2009. Quantities shown concern proved developed and undeveloped reserves together with changes in quantities for 2009, 20082011, 2010 and 2007.2009. The definitions used for proved, proved developed and proved undeveloped oil and gas reserves are in accordance with the revised Rule 4-10 of SEC Regulation S-X. All references in the following tables to reserves or production are to the Group’s entire share of such reserves or production. TOTAL’s worldwide proved reserves include the proved reserves of its consolidated subsidiaries as well as its proportionate share of the proved reserves of equity affiliates and of two companies accounted for by the cost method.affiliates. Changes in oil, bitumen and gas reserves | | | | | | | | | | | | | | | | | | | Proved developed and undeveloped reserves | | Consolidated subsidiaries | | (in millions of barrels of oil equivalent) | | Europe | | | Africa | | | Americas | | | Middle East | | | Asia | | | Total | | Balance as of December 31, 2006 | | 1,903 | | | 3,430 | | | 1,823 | | | 532 | | | 1,288 | | | 8,976 | | Revisions of previous estimates | | 196 | | | 280 | | | (531 | ) | | (23 | ) | | (16 | ) | | (94 | ) | Extensions, discoveries and other | | 50 | | | 93 | | | 2 | | | 1 | | | 51 | | | 197 | | Acquisitions of reserves in place | | — | | | — | | | — | | | — | | | — | | | — | | Sales of reserves in place | | (3 | ) | | (2 | ) | | (465 | ) | | — | | | — | | | (470 | ) | Production for the year | | (246 | ) | | (285 | ) | | (92 | ) | | (36 | ) | | (99 | ) | | (758 | ) | Balance as of December 31, 2007 | | 1,900 | | | 3,516 | | | 737 | | | 474 | | | 1,224 | | | 7,851 | | Revisions of previous estimates | | 41 | | | 374 | | | 50 | | | 106 | | | 144 | | | 715 | | Extensions, discoveries and other | | 82 | | | 110 | | | — | | | — | | | 19 | | | 211 | | Acquisitions of reserves in place | | 17 | | | — | | | — | | | — | | | — | | | 17 | | Sales of reserves in place | | — | | | (74 | ) | | — | | | — | | | (46 | ) | | (120 | ) | Production for the year | | (225 | ) | | (280 | ) | | (55 | ) | | (50 | ) | | (99 | ) | | (709 | ) | Balance as of December 31, 2008 | | 1,815 | | | 3,646 | | | 732 | | | 530 | | | 1,242 | | | 7,965 | | Revisions of previous estimates | | 46 | | | 76 | | | 14 | | | (7 | ) | | 25 | | | 154 | | Extensions, discoveries and other | | 18 | | | 53 | | | 284 | | | 76 | | | — | | | 431 | | Acquisitions of reserves in place | | 12 | | | — | | | 130 | | | — | | | — | | | 142 | | Sales of reserves in place | | (2 | ) | | (43 | ) | | (14 | ) | | — | | | — | | | (59 | ) | Production for the year | | (224 | ) | | (266 | ) | | (56 | ) | | (55 | ) | | (101 | ) | | (702 | ) | Balance as of December 31, 2009 | | 1,665 | | | 3,466 | | | 1,090 | | | 544 | | | 1,166 | | | 7,931 | | | | | Minority interest in proved developed and undeveloped reserves as of | | | | | | | | December 31, 2007 | | 30 | | | 135 | | | — | | | — | | | — | | | 165 | | December 31, 2008 | | 27 | | | 100 | | | — | | | — | | | — | | | 127 | | December 31, 2009 | | 26 | | | 98 | | | — | | | — | | | — | | | 124 | |
| Proved developed and undeveloped reserves | | Equity & non–consolidated affiliates | | | Consolidated subsidiaries | | (in millions of barrels of oil equivalent) | | Europe | | Africa | | Americas | | Middle East | | Asia | | Total | | | Balance as of December 31, 2006 | | — | | 60 | | | — | | | 2,084 | | | — | | 2,144 | | | Revisions of previous estimates | | — | | (3 | ) | | 554 | | | (3 | ) | | — | | 548 | | | Extensions, discoveries and other | | — | | 30 | | | — | | | — | | | — | | 30 | | | Acquisitions of reserves in place | | — | | — | | | — | | | — | | | — | | — | | | Sales of reserves in place | | — | | (9 | ) | | — | | | — | | | — | | (9 | ) | | Production for the year | | — | | (9 | ) | | — | | | (106 | ) | | — | | (115 | ) | | Balance as of December 31, 2007 | | — | | 69 | | | 554 | | | 1,975 | | | — | | 2,598 | | | Revisions of previous estimates | | — | | 22 | | | — | | | (2 | ) | | — | | 20 | | | Extensions, discoveries and other | | — | | 14 | | | — | | | 3 | | | — | | 17 | | | Acquisitions of reserves in place | | — | | — | | | 6 | | | — | | | — | | 6 | | | Sales of reserves in place | | — | | — | | | — | | | — | | | — | | — | | | Production for the year | | — | | (7 | ) | | (33 | ) | | (108 | ) | | — | | (148 | ) | | (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 | | | | 1,815 | | | | 3,646 | | | | 732 | | | | 530 | | | | 1,242 | | | | 7,965 | | Revisions of previous estimates | | — | | 10 | | | (7 | ) | | 51 | | | — | | 54 | | | | 46 | | | | 76 | | | | 14 | | | | (7 | ) | | | 25 | | | | 154 | | Extensions, discoveries and other | | — | | — | | | — | | | 136 | | | — | | 136 | | | | 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 | | — | | (8 | ) | | (18 | ) | | (105 | ) | | — | | (131 | ) | | | (224 | ) | | | (266 | ) | | | (56 | ) | | | (55 | ) | | | (101 | ) | | | (702 | ) | Balance as of December 31, 2009 | | — | | 100 | | | 502 | | | 1,950 | | | — | | 2,552 | | | | 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 | | 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 | |
| | | | | | | | | | | | | Proved developed and undeveloped reserves of consolidated subsidiaries and equity & non-consolidated affiliates (in millions of barrels of oil equivalent) | | Europe | | Africa | | Americas | | Middle East | | Asia | | Total | December 31, 2007 | Proved developed and undeveloped | | 1,900 | | 3,585 | | 1,291 | | 2,449 | | 1,224 | | 10,449 | Consolidated subsidiaries | | 1,900 | | 3,516 | | 737 | | 474 | | 1,224 | | 7,851 | Equity and non-consolidated affiliates | | — | | 69 | | 554 | | 1,975 | | — | | 2,598 | Proved developed | | 1,229 | | 1,917 | | 508 | | 1,242 | | 487 | | 5,383 | Consolidated subsidiaries | | 1,229 | | 1,884 | | 360 | | 452 | | 487 | | 4,412 | Equity and non-consolidated affiliates | | — | | 33 | | 148 | | 790 | | — | | 971 | Proved undeveloped | | 671 | | 1,668 | | 783 | | 1,207 | | 737 | | 5,066 | Consolidated subsidiaries | | 671 | | 1,632 | | 377 | | 22 | | 737 | | 3,439 | Equity and non-consolidated affiliates | | — | | 36 | | 406 | | 1,185 | | — | | 1,627 | December 31, 2008 | Proved developed and undeveloped | | 1,815 | | 3,744 | | 1,259 | | 2,398 | | 1,242 | | 10,458 | Consolidated subsidiaries | | 1,815 | | 3,646 | | 732 | | 530 | | 1,242 | | 7,965 | Equity and non-consolidated affiliates | | — | | 98 | | 527 | | 1,868 | | — | | 2,493 | Proved developed | | 1,252 | | 1,801 | | 515 | | 1,194 | | 481 | | 5,243 | Consolidated subsidiaries | | 1,252 | | 1,754 | | 381 | | 504 | | 481 | | 4,372 | Equity and non-consolidated affiliates | | — | | 47 | | 134 | | 690 | | — | | 871 | Proved undeveloped | | 563 | | 1,943 | | 744 | | 1,204 | | 761 | | 5,215 | Consolidated subsidiaries | | 563 | | 1,892 | | 351 | | 26 | | 761 | | 3,593 | Equity and non-consolidated affiliates | | — | | 51 | | 393 | | 1,178 | | — | | 1,622 | December 31, 2009 | Proved developed and undeveloped | | 1,665 | | 3,566 | | 1,592 | | 2,494 | | 1,166 | | 10,483 | Consolidated subsidiaries | | 1,665 | | 3,466 | | 1,090 | | 544 | | 1,166 | | 7,931 | Equity and non-consolidated affiliates | | — | | 100 | | 502 | | 1,950 | | — | | 2,552 | Proved developed | | 1,096 | | 1,775 | | 631 | | 1,918 | | 415 | | 5,835 | Consolidated subsidiaries | | 1,096 | | 1,745 | | 503 | | 482 | | 415 | | 4,241 | Equity and non-consolidated affiliates | | — | | 30 | | 128 | | 1,436 | | — | | 1,594 | Proved undeveloped | | 569 | | 1,791 | | 961 | | 576 | | 751 | | 4,648 | Consolidated subsidiaries | | 569 | | 1,721 | | 587 | | 62 | | 751 | | 3,690 | Equity and non-consolidated affiliates | | — | | 70 | | 374 | | 514 | | — | | 958 |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | 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, natural gas liquids (condensates, LPG) and bitumen reserves as of December 31, 2007 and 2008 and only crude oil and natural gas liquids reserves as of December 31, 2009. reserves. Bitumen reserves as of December 31,from 2009 are shown separately. | Proved developed and undeveloped reserves | | Consolidated subsidiaries | | | Consolidated subsidiaries | | (in millions of barrels) | | Europe | | Africa | | Americas | | Middle East | | Asia | | Total | | | Balance as of December 31, 2006 | | 893 | | | 2,502 | | | 1,345 | | | 237 | | | 539 | | | 5,516 | | | Revisions of previous estimates | | 108 | | | 149 | | | (549 | ) | | (5 | ) | | (1 | ) | | (298 | ) | | Extensions, discoveries and other | | 4 | | | 90 | | | 2 | | | 1 | | | 6 | | | 103 | | | Acquisitions of reserves in place | | — | | | — | | | — | | | — | | | — | | | — | | | Sales of reserves in place | | (3 | ) | | (2 | ) | | (465 | ) | | — | | | — | | | (470 | ) | | Production for the year | | (122 | ) | | (241 | ) | | (48 | ) | | (30 | ) | | (14 | ) | | (455 | ) | | Balance as of December 31, 2007 | | 880 | | | 2,498 | | | 285 | | | 203 | | | 530 | | | 4,396 | | | Revisions of previous estimates | | 15 | | | 297 | | | (17 | ) | | 54 | | | 64 | | | 413 | | | Extensions, discoveries and other | | 12 | | | 107 | | | — | | | — | | | 3 | | | 122 | | | Acquisitions of reserves in place | | 2 | | | — | | | — | | | — | | | — | | | 2 | | | Sales of reserves in place | | — | | | (74 | ) | | — | | | — | | | (43 | ) | | (117 | ) | | Production for the year | | (111 | ) | | (231 | ) | | (16 | ) | | (32 | ) | | (16 | ) | | (406 | ) | | | | | Europe | | | Africa | | | Americas | | | Middle East | | | Asia | | | Total | | (in million barrels) | | | | Balance as of December 31, 2008 | | 798 | | | 2,597 | | | 252 | | | 225 | | | 538 | | | 4,410 | | | | 798 | | | | 2,597 | | | | 252 | | | | 225 | | | | 538 | | | | 4,410 | | Revisions of previous estimates | | 34 | | | 92 | | | (170 | ) | | (4 | ) | | 51 | | | 3 | | | | 34 | | | | 92 | | | | (170 | ) | | | (4 | ) | | | 51 | | | | 3 | | Extensions, discoveries and other | | 8 | | | 38 | | | 22 | | | 1 | | | — | | | 69 | | | | 8 | | | | 38 | | | | 22 | | | | 1 | | | | — | | | | 69 | | Acquisitions of reserves in place | | 1 | | | — | | | — | | | — | | | — | | | 1 | | | | 1 | | | | — | | | | — | | | | — | | | | — | | | | 1 | | Sales of reserves in place | | — | | | (44 | ) | | (1 | ) | | — | | | — | | | (45 | ) | | | — | | | | (44 | ) | | | (1 | ) | | | — | | | | — | | | | (45 | ) | Production for the year | | (108 | ) | | (223 | ) | | (15 | ) | | (34 | ) | | (17 | ) | | (397 | ) | | | (108 | ) | | | (223 | ) | | | (15 | ) | | | (34 | ) | | | (17 | ) | | | (397 | ) | Balance as of December 31, 2009 | | 733 | | | 2,460 | | | 88 | | | 188 | | | 572 | | | 4,041 | | | | 733 | | | | 2,460 | | | | 88 | | | | 188 | | | | 572 | | | | 4,041 | | | Minority interest in proved developed and undeveloped reserves as of | | | | | | | December 31, 2007 | | 15 | | | 116 | | | — | | | — | | | — | | | 131 | | | December 31, 2008 | | 12 | | | 89 | | | — | | | — | | | — | | | 101 | | | December 31, 2009 | | 12 | | | 88 | | | — | | | — | | | — | | | 100 | | | Proved developed and undeveloped reserves | | Equity & non—consolidated affiliates | | | (in millions of barrels) | | Europe | | Africa | | Americas | | Middle East | | Asia | | Total | | | Balance as of December 31, 2006 | | — | | | 56 | | | — | | | 899 | | | — | | | 955 | | | Revisions of previous estimates | | — | | | (3 | ) | | 533 | | | (5 | ) | | — | | | 525 | | | | 46 | | | | 131 | | | | 7 | | | | (2 | ) | | | — | | | | 182 | | Extensions, discoveries and other | | — | | | 7 | | | — | | | — | | | — | | | 7 | | | | 146 | | | | — | | | | 2 | | | | 82 | | | | 4 | | | | 234 | | Acquisitions of reserves in place | | — | | | — | | | — | | | — | | | — | | | — | | | | 2 | | | | — | | | | — | | | | — | | | | — | | | | 2 | | Sales of reserves in place | | — | | | (9 | ) | | — | | | — | | | — | | | (9 | ) | | | (37 | ) | | | (23 | ) | | | (2 | ) | | | — | | | | (7 | ) | | | (69 | ) | Production for the year | | — | | | (8 | ) | | — | | | (88 | ) | | — | | | (96 | ) | | | (98 | ) | | | (218 | ) | | | (16 | ) | | | (29 | ) | | | (15 | ) | | | (376 | ) | Balance as of December 31, 2007 | | — | | | 43 | | | 533 | | | 806 | | | — | | | 1,382 | | | Balance as of December 31, 2010 | | | | 792 | | | | 2,350 | | | | 79 | | | | 239 | | | | 554 | | | | 4,014 | | Revisions of previous estimates | | — | | | 22 | | | 1 | | | (2 | ) | | — | | | 21 | | | | 49 | | | | (19 | ) | | | 9 | | | | (33 | ) | | | (24 | ) | | | (18 | ) | Extensions, discoveries and other | | — | | | — | | | — | | | 3 | | | — | | | 3 | | | | 17 | | | | 6 | | | | — | | | | — | | | | 58 | | | | 81 | | Acquisitions of reserves in place | | — | | | — | | | 6 | | | — | | | — | | | 6 | | | | 42 | | | | — | | | | — | | | | — | | | | — | | | | 42 | | Sales of reserves in place | | — | | | — | | | — | | | — | | | — | | | — | | | | — | | | | (57 | ) | | | — | | | | — | | | | — | | | | (57 | ) | Production for the year | | — | | | (7 | ) | | (32 | ) | | (88 | ) | | — | | | (127 | ) | | | (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 | | | | — | | | | 58 | | | | 508 | | | | 719 | | | | — | | | | 1,285 | | Revisions of previous estimates | | — | | | (14 | ) | | (5 | ) | | (15 | ) | | — | | | (34 | ) | | | — | | | | (14 | ) | | | (5 | ) | | | (15 | ) | | | — | | | | (34 | ) | Extensions, discoveries and other | | — | | | — | | | — | | | 136 | | | — | | | 136 | | | | — | | | | — | | | | — | | | | 136 | | | | — | | | | 136 | | Acquisitions of reserves in place | | — | | | — | | | — | | | — | | | — | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | Sales of reserves in place | | — | | | — | | | — | | | — | | | — | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | Production for the year | | — | | | (7 | ) | | (18 | ) | | (79 | ) | | — | | | (104 | ) | | | — | | | | (7 | ) | | | (18 | ) | | | (79 | ) | | | — | | | | (104 | ) | Balance as of December 31, 2009 | | — | | | 37 | | | 485 | | | 761 | | | — | | | 1,283 | | | | — | | | | 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 | |
| | | | | | | | | | | | | Proved developed and undeveloped reserves of consolidated subsidiaries and equity & non-consolidated affiliates (in millions of barrels) | | Europe | | Africa | | Americas | | Middle East | | Asia | | Total | December 31, 2007 | Proved developed and undeveloped | | 880 | | 2,541 | | 818 | | 1,009 | | 530 | | 5,778 | Consolidated subsidiaries | | 880 | | 2,498 | | 285 | | 203 | | 530 | | 4,396 | Equity and non-consolidated affiliates | | — | | 43 | | 533 | | 806 | | — | | 1,382 | Proved developed | | 560 | | 1,419 | | 213 | | 744 | | 59 | | 2,995 | Consolidated subsidiaries | | 560 | | 1,389 | | 70 | | 182 | | 59 | | 2,260 | Equity and non-consolidated affiliates | | — | | 30 | | 143 | | 562 | | — | | 735 | Proved undeveloped | | 320 | | 1,122 | | 605 | | 265 | | 471 | | 2,783 | Consolidated subsidiaries | | 320 | | 1,109 | | 215 | | 21 | | 471 | | 2,136 | Equity and non-consolidated affiliates | | — | | 13 | | 390 | | 244 | | — | | 647 | December 31, 2008 | | | | | | | | | | | | | Proved developed and undeveloped | | 798 | | 2,655 | | 760 | | 944 | | 538 | | 5,695 | Consolidated subsidiaries | | 798 | | 2,597 | | 252 | | 225 | | 538 | | 4,410 | Equity and non-consolidated affiliates | | — | | 58 | | 508 | | 719 | | — | | 1,285 | Proved developed | | 516 | | 1,357 | | 183 | | 681 | | 65 | | 2,802 | Consolidated subsidiaries | | 516 | | 1,313 | | 56 | | 201 | | 65 | | 2,151 | Equity and non-consolidated affiliates | | — | | 44 | | 127 | | 480 | | — | | 651 | Proved undeveloped | | 282 | | 1,298 | | 577 | | 263 | | 473 | | 2,893 | Consolidated subsidiaries | | 282 | | 1,284 | | 196 | | 24 | | 473 | | 2,259 | Equity and non-consolidated affiliates | | — | | 14 | | 381 | | 239 | | — | | 634 | December 31, 2009 | | | | | | | | | | | | | Proved developed and undeveloped | | 733 | | 2,497 | | 573 | | 949 | | 572 | | 5,324 | Consolidated subsidiaries | | 733 | | 2,460 | | 88 | | 188 | | 572 | | 4,041 | Equity and non-consolidated affiliates | | — | | 37 | | 485 | | 761 | | — | | 1,283 | Proved developed | | 457 | | 1,331 | | 187 | | 728 | | 65 | | 2,768 | Consolidated subsidiaries | | 457 | | 1,303 | | 66 | | 174 | | 65 | | 2,065 | Equity and non-consolidated affiliates | | — | | 28 | | 121 | | 554 | | — | | 703 | Proved undeveloped | | 276 | | 1,166 | | 386 | | 221 | | 507 | | 2,556 | Consolidated subsidiaries | | 276 | | 1,157 | | 22 | | 14 | | 507 | | 1,976 | Equity and non-consolidated affiliates | | — | | 9 | | 364 | | 207 | | — | | 580 |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | 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, 20072008 and 2008before are included in oil reserves presented in the table “Changes in oil reserves” above.. | | | | | | | | | | | | | | | Proved developed and undeveloped reserves | | Consolidated subsidiaries | | (in millions of 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 | | December 31, 2009 | | | | | | | | | | | | | | | Proved developed reserves | | — | | — | | 19 | | | — | | — | | 19 | | Proved undeveloped reserves | | — | | — | | 346 | | | — | | — | | 346 | |
| | | | | | | | | | | | | | | | | | | | | | | | | Proved developed and undeveloped reserves | | Consolidated subsidiaries | | (in million barrels) | | Europe | | | Africa | | | Americas | | | Middle East | | | Asia | | | Total | | Balance as of December 31, 2008 | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | Revisions of previous estimates | | | — | | | | — | | | | 176 | | | | — | | | | — | | | | 176 | | Extensions, discoveries and other | | | — | | | | — | | | | 192 | | | | — | | | | — | | | | 192 | | Acquisitions of reserves in place | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | Sales of reserves in place | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | Production for the year | | | — | | | | — | | | | (3 | ) | | | — | | | | — | | | | (3 | ) | Balance as of December 31, 2009 | | | — | | | | — | | | | 365 | | | | — | | | | — | | | | 365 | | Revisions of previous estimates | | | — | | | | — | | | | 3 | | | | — | | | | — | | | | 3 | | Extensions, discoveries and other | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | Acquisitions of reserves in place | | | — | | | | — | | | | 425 | | | | — | | | | — | | | | 425 | | Sales of reserves in place | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | Production for the year | | | — | | | | — | | | | (4 | ) | | | — | | | | — | | | | (4 | ) | Balance as of December 31, 2010 | | | — | | | | — | | | | 789 | | | | — | | | | — | | | | 789 | | Revisions of previous estimates | | | — | | | | — | | | | (109 | ) | | | — | | | | — | | | | (109 | ) | Extensions, discoveries and other | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | Acquisitions of reserves in place | | | — | | | | — | | | | 308 | | | | — | | | | — | | | | 308 | | Sales of reserves in place | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | Production for the year | | | — | | | | — | | | | (4 | ) | | | — | | | | — | | | | (4 | ) | Balance as of December 31, 2011 | | | — | | | | — | | | | 984 | | | | — | | | | — | | | | 984 | | | | | | | | | Proved developed reserves as of | | | | | | | | | | | | | | | | | | | | | | | | | December 31, 2009 | | | — | | | | — | | | | 19 | | | | — | | | | — | | | | 19 | | December 31, 2010 | | | — | | | | — | | | | 18 | | | | — | | | | — | | | | 18 | | December 31, 2011 | | | — | | | | — | | | | 21 | | | | — | | | | — | | | | 21 | | | | | | | | | Proved undeveloped reserves as of | | | | | | | | | | | | | | | | | | | | | | | | | December 31, 2009 | | | — | | | | — | | | | 346 | | | | — | | | | — | | | | 346 | | December 31, 2010 | | | — | | | | — | | | | 771 | | | | — | | | | — | | | | 771 | | December 31, 2011 | | | — | | | | — | | | | 963 | | | | — | | | | — | | | | 963 | |
There are no bitumen reserves for equity and non-consolidated affiliates. There are no minority interests for bitumen reserves. Changes in gas reserves | Proved developed and undeveloped reserves | | Consolidated subsidiaries | | | Consolidated subsidiaries | | (in billions of cubic feet) | | Europe | | Africa | | Americas | | Middle East | | Asia | | Total | | | Balance as of December 31, 2006 | | 5,452 | | | 4,787 | | | 2,711 | | | 1,769 | | | 4,347 | | | 19,066 | | | Revisions of previous estimates | | 487 | | | 805 | | | 88 | | | (163 | ) | | (79 | ) | | 1,138 | | | Extensions, discoveries and other | | 265 | | | 12 | | | 3 | | | — | | | 263 | | | 543 | | | Acquisitions of reserves in place | | — | | | — | | | — | | | — | | | — | | | — | | | Sales of reserves in place | | — | | | (1 | ) | | — | | | — | | | — | | | (1 | ) | | Production for the year | | (673 | ) | | (232 | ) | | (238 | ) | | (34 | ) | | (486 | ) | | (1,663 | ) | | Balance as of December 31, 2007 | | 5,531 | | | 5,371 | | | 2,564 | | | 1,572 | | | 4,045 | | | 19,083 | | | Revisions of previous estimates | | 145 | | | 381 | | | 366 | | | 300 | | | 458 | | | 1,650 | | | Extensions, discoveries and other | | 377 | | | 17 | | | — | | | — | | | 90 | | | 484 | | | Acquisitions of reserves in place | | 76 | | | — | | | — | | | — | | | — | | | 76 | | | Sales of reserves in place | | — | | | — | | | — | | | — | | | (15 | ) | | (15 | ) | | Production for the year | | (622 | ) | | (240 | ) | | (216 | ) | | (103 | ) | | (480 | ) | | (1,661 | ) | | (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 | | | | 5,507 | | | | 5,529 | | | | 2,714 | | | | 1,769 | | | | 4,098 | | | | 19,617 | | Revisions of previous estimates | | 73 | | | (127 | ) | | 25 | | | (18 | ) | | (165 | ) | | (212 | ) | | | 73 | | | | (127 | ) | | | 25 | | | | (18 | ) | | | (165 | ) | | | (212 | ) | Extensions, discoveries and other | | 55 | | | 61 | | | 382 | | | 399 | | | — | | | 897 | | | | 55 | | | | 61 | | | | 382 | | | | 399 | | | | — | | | | 897 | | Acquisitions of reserves in place | | 58 | | | — | | | 752 | | | — | | | — | | | 810 | | | | 58 | | | | — | | | | 752 | | | | — | | | | — | | | | 810 | | Sales of reserves in place | | (13 | ) | | — | | | (64 | ) | | — | | | — | | | (77 | ) | | | (13 | ) | | | — | | | | (64 | ) | | | — | | | | — | | | | (77 | ) | Production for the year | | (633 | ) | | (217 | ) | | (212 | ) | | (122 | ) | | (467 | ) | | (1,651 | ) | | | (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 | | | | 5,047 | | | | 5,246 | | | | 3,597 | | | | 2,028 | | | | 3,466 | | | | 19,384 | | | Minority interest in proved developed and undeveloped reserves as of | | | | | | | December 31, 2007 | | 80 | | | 111 | | | — | | | — | | | — | | | 191 | | | December 31, 2008 | | 75 | | | 64 | | | — | | | — | | | — | | | 139 | | | December 31, 2009 | | 73 | | | 60 | | | — | | | — | | | — | | | 133 | | | Proved developed and undeveloped reserves | | Equity & non–consolidated affiliates | | | (in billions of cubic feet) | | Europe | | Africa | | Americas | | Middle East | | Asia | | Total | | | Balance as of December 31, 2006 | | — | | | 20 | | | — | | | 6,453 | | | — | | | 6,473 | | | Revisions of previous estimates | | — | | | — | | | 125 | | | 30 | | | — | | | 155 | | | | 271 | | | | 346 | | | | 415 | | | | (80 | ) | | | 15 | | | | 967 | | Extensions, discoveries and other | | — | | | 126 | | | — | | | — | | | — | | | 126 | | | | 193 | | | | — | | | | 88 | | | | 70 | | | | 138 | | | | 489 | | Acquisitions of reserves in place | | — | | | — | | | — | | | — | | | — | | | — | | | | 111 | | | | — | | | | — | | | | — | | | | 51 | | | | 162 | | Sales of reserves in place | | — | | | (4 | ) | | — | | | — | | | — | | | (4 | ) | | | (43 | ) | | | (20 | ) | | | (16 | ) | | | — | | | | (4 | ) | | | (83 | ) | Production for the year | | — | | | (2 | ) | | — | | | (101 | ) | | — | | | (103 | ) | | | (617 | ) | | | (258 | ) | | | (278 | ) | | | (151 | ) | | | (472 | ) | | | (1,776 | ) | Balance as of December 31, 2007 | | — | | | 140 | | | 125 | | | 6,382 | | | — | | | 6,647 | | | Balance as of December 31, 2010 | | | | 4,962 | | | | 5,314 | | | | 3,806 | | | | 1,867 | | | | 3,194 | | | | 19,143 | | Revisions of previous estimates | | — | | | — | | | (13 | ) | | — | | | — | | | (13 | ) | | | 358 | | | | (216 | ) | | | 367 | | | | (180 | ) | | | 1 | | | | 330 | | Extensions, discoveries and other | | — | | | 76 | | | — | | | — | | | — | | | 76 | | | | 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 | | — | | | (1 | ) | | (2 | ) | | (106 | ) | | — | | | (109 | ) | | | (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 | | 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 | | | | — | | | | 215 | | | | 110 | | | | 6,276 | | | | — | | | | 6,601 | | Revisions of previous estimates | | — | | | 127 | | | (13 | ) | | 363 | | | — | | | 477 | | | | — | | | | 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 | ) | | | — | | | | (1 | ) | | | (2 | ) | | | (141 | ) | | | — | | | | (144 | ) | Balance as of December 31, 2009 | | — | | | 341 | | | 95 | | | 6,498 | | | — | | | 6,934 | | | | — | | | | 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 | |
| | | | | | | | | | | | | Proved developed and undeveloped reserves of consolidated subsidiaries and equity & non-consolidated affiliates (in billions of cubic feet) | | Europe | | Africa | | Americas | | Middle East | | Asia | | Total | December 31, 2007 | Proved developed and undeveloped | | 5,531 | | 5,511 | | 2,689 | | 7,954 | | 4,045 | | 25,730 | Consolidated subsidiaries | | 5,531 | | 5,371 | | 2,564 | | 1,572 | | 4,045 | | 19,083 | Equity and non-consolidated affiliates | | — | | 140 | | 125 | | 6,382 | | — | | 6,647 | Proved developed | | 3,602 | | 2,574 | | 1,647 | | 2,797 | | 2,487 | | 13,107 | Consolidated subsidiaries | | 3,602 | | 2,560 | | 1,619 | | 1,572 | | 2,487 | | 11,840 | Equity and non-consolidated affiliates | | — | | 14 | | 28 | | 1,225 | | — | | 1,267 | Proved undeveloped | | 1,929 | | 2,937 | | 1,042 | | 5,157 | | 1,558 | | 12,623 | Consolidated subsidiaries | | 1,929 | | 2,811 | | 945 | | — | | 1,558 | | 7,243 | Equity and non-consolidated affiliates | | — | | 126 | | 97 | | 5,157 | | — | | 5,380 | December 31, 2008 | Proved developed and undeveloped | | 5,507 | | 5,744 | | 2,824 | | 8,045 | | 4,098 | | 26,218 | Consolidated subsidiaries | | 5,507 | | 5,529 | | 2,714 | | 1,769 | | 4,098 | | 19,617 | Equity and non-consolidated affiliates | | — | | 215 | | 110 | | 6,276 | | — | | 6,601 | Proved developed | | 3,989 | | 2,292 | | 1,849 | | 2,893 | | 2,440 | | 13,463 | Consolidated subsidiaries | | 3,989 | | 2,280 | | 1,807 | | 1,766 | | 2,440 | | 12,282 | Equity and non-consolidated affiliates | | — | | 12 | | 42 | | 1,127 | | — | | 1,181 | Proved undeveloped | | 1,518 | | 3,452 | | 975 | | 5,152 | | 1,658 | | 12,755 | Consolidated subsidiaries | | 1,518 | | 3,249 | | 907 | | 3 | | 1,658 | | 7,335 | Equity and non-consolidated affiliates | | — | | 203 | | 68 | | 5,149 | | — | | 5,420 | December 31, 2009 | Proved developed and undeveloped | | 5,047 | | 5,587 | | 3,692 | | 8,526 | | 3,466 | | 26,318 | Consolidated subsidiaries | | 5,047 | | 5,246 | | 3,597 | | 2,028 | | 3,466 | | 19,384 | Equity and non-consolidated affiliates | | — | | 341 | | 95 | | 6,498 | | — | | 6,934 | Proved developed | | 3,463 | | 2,272 | | 2,388 | | 6,606 | | 2,059 | | 16,788 | Consolidated subsidiaries | | 3,463 | | 2,261 | | 2,343 | | 1,773 | | 2,059 | | 11,899 | Equity and non-consolidated affiliates | | — | | 11 | | 45 | | 4,833 | | — | | 4,889 | Proved undeveloped | | 1,584 | | 3,315 | | 1,304 | | 1,920 | | 1,407 | | 9,530 | Consolidated subsidiaries | | 1,584 | | 2,985 | | 1,254 | | 255 | | 1,407 | | 7,485 | Equity and non-consolidated affiliates | | — | | 330 | | 50 | | 1,665 | | — | | 2,045 |
| | | | | | | | | | | | | | | | | | | | | | | | | | | 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 do not include revenues and expenses related to oil and gas transportation activities and LNG liquefaction and transportation activities. | | | | | Consolidated subsidiaries | | | Consolidated subsidiaries | | (M€) | | | | Europe | | Africa | | Americas | | Middle East | | Asia | | Total | | | Europe | | Africa | | Americas | | Middle East | | Asia | | Total | | Year ended December 31, 2007 | | | | | | | | | | | | | | | | Revenues | | Non-Group sales | | 3,715 | | | 2,497 | | | 1,869 | | | 1,180 | | | 2,150 | | | 11,411 | | | | | Group sales | | 5,484 | | | 9,724 | | | 417 | | | 321 | | | 558 | | | 16,504 | | | 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 | Total Revenues | | 9,199 | | | 12,221 | | | 2,286 | | | 1,501 | | | 2,708 | | | 27,915 | | | | 7,227 | | | | 9,417 | | | | 893 | | | | 1,415 | | | | 2,523 | | | | 21,475 | | Production costs | Production costs | | (1,102 | ) | | (906 | ) | | (248 | ) | | (192 | ) | | (240 | ) | | (2,688 | ) | | | (1,155 | ) | | | (1,122 | ) | | | (193 | ) | | | (204 | ) | | | (243 | ) | | | (2,917 | ) | Exploration expenses | Exploration expenses | | (113 | ) | | (480 | ) | | (145 | ) | | (9 | ) | | (129 | ) | | (876 | ) | | | (160 | ) | | | (265 | ) | | | (121 | ) | | | (81 | ) | | | (70 | ) | | | (697 | ) | Depreciation, depletion and amortization and valuation allowances | Depreciation, depletion and amortization and valuation allowances | | (1,287 | ) | | (932 | ) | | (379 | ) | | (318 | ) | | (395 | ) | | (3,311 | ) | | | (1,489 | ) | | | (1,471 | ) | | | (262 | ) | | | (314 | ) | | | (613 | ) | | | (4,149 | ) | Other expenses(1) | | (244 | ) | | (1,238 | ) | | (544 | ) | | (273 | ) | | (50 | ) | | (2,349 | ) | | Other expenses(a) | | | | (261 | ) | | | (895 | ) | | | (181 | ) | | | (170 | ) | | | (56 | ) | | | (1,563 | ) | Pre-tax income from producing activities | Pre-tax income from producing activities | | 6,453 | | | 8,665 | | | 970 | | | 709 | | | 1,894 | | | 18,691 | | | | 4,162 | | | | 5,664 | | | | 136 | | | | 646 | | | | 1,541 | | | | 12,149 | | Income tax | Income tax | | (4,180 | ) | | (5,772 | ) | | (576 | ) | | (421 | ) | | (934 | ) | | (11,883 | ) | | | (2,948 | ) | | | (3,427 | ) | | | (103 | ) | | | (309 | ) | | | (747 | ) | | | (7,534 | ) | Results of oil and gas producing activities | Results of oil and gas producing activities | | 2,273 | | | 2,893 | | | 394 | | | 288 | | | 960 | | | 6,808 | | | | 1,214 | | | | 2,237 | | | | 33 | | | | 337 | | | | 794 | | | | 4,615 | | | Year ended December 31, 2008 | | | | | | | | | | | | | | | | Revenues | | Non-Group sales | | 4,521 | | | 2,930 | | | 707 | | | 1,558 | | | 2,819 | | | 12,535 | | | | | Group sales | | 6,310 | | | 11,425 | | | 360 | | | 409 | | | 626 | | | 19,130 | | | 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 | Total Revenues | | 10,831 | | | 14,355 | | | 1,067 | | | 1,967 | | | 3,445 | | | 31,665 | | | | 8,438 | | | | 12,533 | | | | 1,168 | | | | 1,682 | | | | 3,223 | | | | 27,044 | | Production costs | Production costs | | (1,280 | ) | | (1,055 | ) | | (213 | ) | | (249 | ) | | (263 | ) | | (3,060 | ) | | | (1,281 | ) | | | (1,187 | ) | | | (222 | ) | | | (259 | ) | | | (279 | ) | | | (3,228 | ) | Exploration expenses | Exploration expenses | | (185 | ) | | (209 | ) | | (130 | ) | | (4 | ) | | (236 | ) | | (764 | ) | | | (266 | ) | | | (275 | ) | | | (216 | ) | | | (8 | ) | | | (99 | ) | | | (864 | ) | Depreciation, depletion and amortization and valuation allowances | Depreciation, depletion and amortization and valuation allowances | | (1,266 | ) | | (1,195 | ) | | (318 | ) | | (364 | ) | | (471 | ) | | (3,614 | ) | | | (1,404 | ) | | | (1,848 | ) | | | (368 | ) | | | (264 | ) | | | (830 | ) | | | (4,714 | ) | Other expenses(1) | | (260 | ) | | (1,214 | ) | | (225 | ) | | (357 | ) | | (60 | ) | | (2,116 | ) | | Other expenses(a) | | | | (299 | ) | | | (1,014 | ) | | | (218 | ) | | | (241 | ) | | | (72 | ) | | | (1,844 | ) | Pre-tax income from producing activities | Pre-tax income from producing activities | | 7,840 | | | 10,682 | | | 181 | | | 993 | | | 2,415 | | | 22,111 | | | | 5,188 | | | | 8,209 | | | | 144 | | | | 910 | | | | 1,943 | | | | 16,394 | | Income tax | Income tax | | (5,376 | ) | | (7,160 | ) | | (109 | ) | | (481 | ) | | (1,212 | ) | | (14,338 | ) | | | (3,237 | ) | | | (5,068 | ) | | | (83 | ) | | | (402 | ) | | | (950 | ) | | | (9,740 | ) | Results of oil and gas producing activities | Results of oil and gas producing activities | | 2,464 | | | 3,522 | | | 72 | | | 512 | | | 1,203 | | | 7,773 | | | | 1,951 | | | | 3,141 | | | | 61 | | | | 508 | | | | 993 | | | | 6,654 | | | Year ended December 31, 2009 | | | | | | | | | | | | | | | | Revenues | | Non-Group sales | | 2,499 | | | 1,994 | | | 583 | | | 859 | | | 1,926 | | | 7,861 | | | | | Group sales | | 4,728 | | | 7,423 | | | 310 | | | 556 | | | 597 | | | 13,614 | | | 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 | Total Revenues | | 7,227 | | | 9,417 | | | 893 | | | 1,415 | | | 2,523 | | | 21,475 | | | | 10,173 | | | | 14,553 | | | | 1,540 | | | | 1,896 | | | | 3,913 | | | | 32,075 | | Production costs | Production costs | | (1,155 | ) | | (1,122 | ) | | (193 | ) | | (204 | ) | | (243 | ) | | (2,917 | ) | | | (1,235 | ) | | | (1,179 | ) | | | (250 | ) | | | (286 | ) | | | (304 | ) | | | (3,254 | ) | Exploration expenses | Exploration expenses | | (160 | ) | | (265 | ) | | (121 | ) | | (81 | ) | | (70 | ) | | (697 | ) | | | (343 | ) | | | (323 | ) | | | (48 | ) | | | (11 | ) | | | (294 | ) | | | (1,019 | ) | Depreciation, depletion and amortization and valuation allowances | Depreciation, depletion and amortization and valuation allowances | | (1,489 | ) | | (1,471 | ) | | (262 | ) | | (314 | ) | | (613 | ) | | (4,149 | ) | | | (1,336 | ) | | | (1,845 | ) | | | (352 | ) | | | (278 | ) | | | (791 | ) | | | (4,602 | ) | Other expenses(1) | | (261 | ) | | (895 | ) | | (181 | ) | | (170 | ) | | (56 | ) | | (1,563 | ) | | Other expenses(a) | | | | (307 | ) | | | (1,181 | ) | | | (274 | ) | | | (276 | ) | | | (95 | ) | | | (2,133 | ) | Pre-tax income from producing activities | Pre-tax income from producing activities | | 4,162 | | | 5,664 | | | 136 | | | 646 | | | 1,541 | | | 12,149 | | | | 6,952 | | | | 10,025 | | | | 616 | | | | 1,045 | | | | 2,429 | | | | 21,067 | | Income tax | Income tax | | (2,948 | ) | | (3,427 | ) | | (103 | ) | | (309 | ) | | (747 | ) | | (7,534 | ) | | | (5,059 | ) | | | (6,484 | ) | | | (293 | ) | | | (465 | ) | | | (1,302 | ) | | | (13,603 | ) | Results of oil and gas producing activities | Results of oil and gas producing activities | | 1,214 | | | 2,237 | | | 33 | | | 337 | | | 794 | | | 4,615 | | | | 1,893 | | | | 3,541 | | | | 323 | | | | 580 | | | | 1,127 | | | | 7,464 | | | Group’s share of equity affiliates’ results of oil and gas producing activities | | | | | | | | | | | | Year ended December 31, 2007 | | — | | | 95 | | | — | | | 179 | | | — | | | 274 | | | Year ended December 31, 2008 | | — | | | 49 | | | 245 | | | 287 | | | — | | | 581 | | | (1) Including production taxes and IAS 37 accretion expense (€169 million in 2007,€223 million in 2008 and€271 million in 2009). | | | | | | | Equity affiliates | | | (M€) | | | | Europe | | Africa | | Americas | | Middle East | | Asia | | Total | | | Year ended December 31, 2009 | | | | | | | | | | | | | | | | Revenues | | 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 | | |
(a) | 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). |
| | | | | | | | | | | | | | | | | | | | | | | | | | | 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 | |
COSTSCOST INCURRED IN OIL AND GAS PROPERTY ACQUISITION, EXPLORATION AND DEVELOPMENT ACTIVITIES
The following tables set forth the costs incurred in the Group’s oil and gas property acquisition, exploration and development activities, including both capitalized and expensed amounts. They do not include costs incurred related to oil and gas transportation and LNG liquefaction and transportation activities. | | | Consolidated Subsidiaries | | Consolidated subsidiaries | | (M€) | | Europe | | Africa | | Americas | | Middle East | | Asia | | Total | | Europe | | | Africa | | | Americas | | | Middle East | | | Asia | | | Total | | Year ended December 31, 2007 | | | | | | | | | | | | | | 2009 | | | | | | | | | | | | | | Proved property acquisition | | — | | 50 | | — | | 7 | | 4 | | 61 | | | 71 | | | | 45 | | | | 1,551 | | | | 105 | | | | — | | | | 1,772 | | Unproved property acquisition | | — | | 265 | | 9 | | 10 | | 18 | | 302 | | | 26 | | | | 8 | | | | 403 | | | | — | | | | 21 | | | | 458 | | Exploration costs | | 230 | | 586 | | 126 | | 9 | | 244 | | 1,195 | | | 284 | | | | 475 | | | | 222 | | | | 87 | | | | 123 | | | | 1,191 | | Development costs(1) | | 1,762 | | 2,853 | | 615 | | 320 | | 1,275 | | 6,825 | | Development costs(a) | | | | 1,658 | | | | 3,288 | | | | 618 | | | | 250 | | | | 1,852 | | | | 7,666 | | Total cost incurred | | 1,992 | | 3,754 | | 750 | | 346 | | 1,541 | | 8,383 | | | 2,039 | | | | 3,816 | | | | 2,794 | | | | 442 | | | | 1,996 | | | | 11,087 | | | Year ended December 31, 2008 | | | | | | | | | | | | | | 2010 | | | | | | | | | | | | | | Proved property acquisition | | 269 | | 78 | | — | | 8 | | 18 | | 373 | | | 162 | | | | 137 | | | | 26 | | | | 139 | | | | 21 | | | | 485 | | Unproved property acquisition | | 24 | | 143 | | 22 | | 5 | | 3 | | 197 | | | 5 | | | | 124 | | | | 1,186 | | | | 8 | | | | 619 | | | | 1,942 | | Exploration costs | | 228 | | 493 | | 155 | | 11 | | 312 | | 1,199 | | | 361 | | | | 407 | | | | 276 | | | | 17 | | | | 250 | | | | 1,311 | | Development costs(1) | | 2,035 | | 3,121 | | 408 | | 281 | | 1,596 | | 7,441 | | Development costs(a) | | | | 1,565 | | | | 3,105 | | | | 718 | | | | 247 | | | | 2,007 | | | | 7,642 | | Total cost incurred | | 2,556 | | 3,835 | | 585 | | 305 | | 1,929 | | 9,210 | | | 2,093 | | | | 3,773 | | | | 2,206 | | | | 411 | | | | 2,897 | | | | 11,380 | | | Year ended December 31, 2009 | | | | | | | | | | | | | | 2011 | | | | | | | | | | | | | | Proved property acquisition | | 71 | | 45 | | 1,551 | | 105 | | — | | 1,772 | | | 298 | | | | 10 | | | | 413 | | | | 2 | | | | 251 | | | | 974 | | Unproved property acquisition | | 26 | | 8 | | 403 | | — | | 21 | | 458 | | | 1 | | | | 397 | | | | 1,692 | | | | 3 | | | | 14 | | | | 2,107 | | Exploration costs | | 284 | | 475 | | 222 | | 87 | | 123 | | 1,191 | | | 505 | | | | 384 | | | | 239 | | | | 17 | | | | 417 | | | | 1,562 | | Development costs(1) | | 1,658 | | 3,288 | | 618 | | 250 | | 1,852 | | 7,666 | | Development costs(a) | | | | 2,352 | | | | 3,895 | | | | 1,329 | | | | 329 | | | | 2,823 | | | | 10,728 | | Total cost incurred | | 2,039 | | 3,816 | | 2,794 | | 442 | | 1,996 | | 11,087 | | | 3,156 | | | | 4,686 | | | | 3,673 | | | | 351 | | | | 3,505 | | | | 15,371 | | | Group’s share of equity affiliates’ costs of property acquisition, exploration and development | | | | | | Year ended December 31, 2007 | | — | | 48 | | — | | 599 | | — | | 647 | | Year ended December 31, 2008 | | — | | 360 | | 85 | | 527 | | — | | 972 | | | | Equity affiliates | | (M€) | | Europe | | Africa | | Americas | | Middle East | | Asia | | Total | | Year ended December 31, 2009 | | | | | | | | | | | | | | Proved property acquisition | | — | | — | | — | | — | | — | | — | | Unproved property acquisition | | — | | — | | — | | — | | — | | — | | Exploration costs | | — | | — | | 22 | | 3 | | — | | 25 | | Development costs(1) | | — | | 28 | | 93 | | 293 | | 23 | | 437 | | Total cost incurred | | — | | 28 | | 115 | | 296 | | 23 | | 462 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | 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 | |
(1)(a) | Including asset retirement costs capitalized during the year and any gains or losses recognized upon settlement of asset retirement obligation during the year. |
CAPITALIZED COSTCOSTS RELATED TO OIL AND GAS PRODUCING ACTIVITIES The following tables do not include capitalized costcosts related to oil and gas transportation and LNG liquefaction and transportation activities. | | | Consolidated Subsidiaries | | | (M€) | | Europe | | Africa | | Americas | | Middle East | | Asia | | Total | | | As of December 31, 2007 | | | | | | | | | | | | | | Proved properties | | 29,263 | | | 20,035 | | | 4,032 | | | 4,266 | | | 6,951 | | | 64,547 | | | Unproved properties | | 215 | | | 993 | | | 153 | | | 12 | | | 395 | | | 1,768 | | | Total capitalized costs | | 29,478 | | | 21,028 | | | 4,185 | | | 4,278 | | | 7,346 | | | 66,315 | | | Accumulated depreciation, depletion and amortization | | (21,092 | ) | | (10,484 | ) | | (1,683 | ) | | (2,861 | ) | | (2,005 | ) | | (38,125 | ) | | Net capitalized costs | | 8,386 | | | 10,544 | | | 2,502 | | | 1,417 | | | 5,341 | | | 28,190 | | | As of December 31, 2008 | | | | | | | | | | | | | | Proved properties | | 26,030 | | | 25,136 | | | 4,508 | | | 4,824 | | | 8,836 | | | 69,334 | | | Unproved properties | | 132 | | | 1,145 | | | 204 | | | 25 | | | 410 | | | 1,916 | | | Total capitalized costs | | 26,162 | | | 26,281 | | | 4,712 | | | 4,849 | | | 9,246 | | | 71,250 | | | Accumulated depreciation, depletion and amortization | | (18,382 | ) | | (12,339 | ) | | (2,051 | ) | | (3,420 | ) | | (2,598 | ) | | (38,790 | ) | | Net capitalized costs | | 7,780 | | | 13,942 | | | 2,661 | | | 1,429 | | | 6,648 | | | 32,460 | | | As of December 31, 2009 | | | | | | | | | | | | | | Proved properties | | 30,613 | | | 27,557 | | | 7,123 | | | 5,148 | | | 10,102 | | | 80,543 | | | Unproved properties | | 337 | | | 1,138 | | | 839 | | | 30 | | | 555 | | | 2,899 | | | Total capitalized costs | | 30,950 | | | 28,695 | | | 7,962 | | | 5,178 | | | 10,657 | | | 83,442 | | | Accumulated depreciation, depletion and amortization | | (21,870 | ) | | (13,510 | ) | | (2,214 | ) | | (3,325 | ) | | (3,085 | ) | | (44,004 | ) | | Net capitalized costs | | 9,080 | | | 15,185 | | | 5,748 | | | 1,853 | | | 7,572 | | | 39,438 | | | | Group’s share of equity affiliates’ net capitalized costs(1) | | | | | | | | | | | | | | As of December 31, 2007 | | — | | | 233 | | | — | | | 403 | | | — | | | 636 | | | As of December 31, 2008 | | — | | | 403 | | | 288 | | | 638 | | | — | | | 1,329 | | | | | Equity affiliates | | | Consolidated subsidiaries | | (M€) | | Europe | | Africa | | Americas | | Middle East | | Asia | | Total | | | Europe | | Africa | | Americas | | Middle East | | Asia | | Total | | As of December 31, 2009 | | | | | | | | | | | | | | | | | | | | | | | | | Proved properties | | — | | | 610 | | | 726 | | | 2,404 | | | — | | | 3,740 | | | | 30,613 | | | | 27,557 | | | | 7,123 | | | | 5,148 | | | | 10,102 | | | | 80,543 | | Unproved properties | | — | | | — | | | 135 | | | — | | | 62 | | | 197 | | | | 337 | | | | 1,138 | | | | 839 | | | | 30 | | | | 555 | | | | 2,899 | | Total capitalized costs | | — | | | 610 | | | 861 | | | 2,404 | | | 62 | | | 3,937 | | | | 30,950 | | | | 28,695 | | | | 7,962 | | | | 5,178 | | | | 10,657 | | | | 83,442 | | Accumulated depreciation, depletion and amortization | | — | | | (387 | ) | | (171 | ) | | (1,723 | ) | | — | | | (2,281 | ) | | | (21,870 | ) | | | (13,510 | ) | | | (2,214 | ) | | | (3,325 | ) | | | (3,085 | ) | | | (44,004 | ) | Net capitalized costs | | — | | | 223 | | | 690 | | | 681 | | | 62 | | | 1,656 | | | | 9,080 | | | | 15,185 | | | | 5,748 | | | | 1,853 | | | | 7,572 | | | | 39,438 | | As of December 31, 2010 | | | | | | | | | | | | | | Proved properties | | | | 31,735 | | | | 32,494 | | | | 7,588 | | | | 5,715 | | | | 12,750 | | | | 90,282 | | Unproved properties | | | | 402 | | | | 1,458 | | | | 2,142 | | | | 49 | | | | 1,433 | | | | 5,484 | | Total capitalized costs | | | | 32,137 | | | | 33,952 | | | | 9,730 | | | | 5,764 | | | | 14,183 | | | | 95,766 | | Accumulated depreciation, depletion and amortization | | | | (23,006 | ) | | | (16,716 | ) | | | (2,302 | ) | | | (3,849 | ) | | | (4,092 | ) | | | (49,965 | ) | Net capitalized costs | | | | 9,131 | | | | 17,236 | | | | 7,428 | | | | 1,915 | | | | 10,091 | | | | 45,801 | | As of December 31, 2011 | | | | | | | | | | | | | | Proved properties | | | | 34,308 | | | | 37,032 | | | | 8,812 | | | | 6,229 | | | | 17,079 | | | | 103,460 | | Unproved properties | | | | 460 | | | | 1,962 | | | | 4,179 | | | | 62 | | | | 911 | | | | 7,574 | | Total capitalized costs | | | | 34,768 | | | | 38,994 | | | | 12,991 | | | | 6,291 | | | | 17,990 | | | | 111,034 | | Accumulated depreciation, depletion and amortization | | | | (24,047 | ) | | | (18,642 | ) | | | (2,294 | ) | | | (4,274 | ) | | | (5,066 | ) | | | (54,323 | ) | Net capitalized costs | | | | 10,721 | | | | 20,352 | | | | 10,697 | | | | 2,017 | | | | 12,924 | | | | 56,711 | |
(1) | Capitalized costs previously reported for equity affiliates have been restated to be consistent with the methods used for consolidated subsidiaries |
| | | | | | | | | | | | | | | | | | | | | | | | | | | Equity affiliates | | (M€) | | Europe | | | Africa | | | Americas | | | Middle East | | | Asia | | | Total | | As of December 31, 2009 | | | | | | | | | | | | | | | | | | | | | | | | | Proved properties | | | — | | | | 610 | | | | 726 | | | | 2,404 | | | | — | | | | 3,740 | | Unproved properties | | | — | | | | — | | | | 135 | | | | — | | | | 62 | | | | 197 | | Total capitalized costs | | | — | | | | 610 | | | | 861 | | | | 2,404 | | | | 62 | | | | 3,937 | | Accumulated depreciation, depletion and amortization | | | — | | | | (387 | ) | | | (171 | ) | | | (1,723 | ) | | | — | | | | (2,281 | ) | Net capitalized costs | | | — | | | | 223 | | | | 690 | | | | 681 | | | | 62 | | | | 1,656 | | As of December 31, 2010 | | | | | | | | | | | | | | | | | | | | | | | | | Proved properties | | | — | | | | 639 | | | | 887 | | | | 3,110 | | | | — | | | | 4,636 | | Unproved properties | | | — | | | | 25 | | | | 168 | | | | — | | | | 138 | | | | 331 | | Total capitalized costs | | | — | | | | 664 | | | | 1,055 | | | | 3,110 | | | | 138 | | | | 4,967 | | Accumulated depreciation, depletion and amortization | | | — | | | | (462 | ) | | | (307 | ) | | | (2,029 | ) | | | — | | | | (2,798 | ) | Net capitalized costs | | | — | | | | 202 | | | | 748 | | | | 1,081 | | | | 138 | | | | 2,169 | | As of December 31, 2011 | | | | | | | | | | | | | | | | | | | | | | | | | Proved properties | | | — | | | | — | | | | 731 | | | | 3,496 | | | | 3,973 | | | | 8,200 | | Unproved properties | | | — | | | | — | | | | — | | | | — | | | | 1,146 | | | | 1,146 | | Total capitalized costs | | | — | | | | — | | | | 731 | | | | 3,496 | | | | 5,119 | | | | 9,346 | | Accumulated depreciation, depletion and amortization | | | — | | | | — | | | | (96 | ) | | | (2,337 | ) | | | (213 | ) | | | (2,646 | ) | Net capitalized costs | | | — | | | | — | | | | 635 | | | | 1,159 | | | | 4,906 | | | | 6,700 | |
STANDARDIZED MEASURE OF DISCOUNTED FUTURE NET CASH FLOWS (EXCLUDING (EXCLUDING TRANSPORTATION) The standardized measure of discounted future net cash flows relating to proved oil bitumen and gas reserve quantities was developed as follows: 1. | Estimates of proved reserves and the corresponding production profiles are based on existing technical and economic conditions; |
estimates of proved reserves and the corresponding production profiles are based on existing technical and economic conditions; 2. | The estimated future cash flows are determined based on prices used in estimating the Group’s proved oil and gas reserves; |
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; | cost 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 ASC 932 and do not reflect the expectations of real revenues from these reserves, nor their present value; hence, they do not constitute criteria for investment decisions. An estimate of the fair value of reserves should also take into account, among other things, the recovery of reserves not presently classified as proved, anticipated future changes in prices and costs and a discount factor more representative of the time value of money and the risks inherent in reserves estimates. | | | Consolidated Subsidiaries | | | (M€) | | Europe | | Africa | | Americas | | Middle East | | Asia | | Total | | | As of December 31, 2007 | | | | | | | | | | | | | | Future cash inflows | | 87,540 | | | 157,199 | | | 15,000 | | | 13,377 | | | 46,758 | | | 319,874 | | | Future production costs | | (12,897 | ) | | (23,109 | ) | | (6,702 | ) | | (3,342 | ) | | (5,519 | ) | | (51,569 | ) | | Future development costs | | (10,764 | ) | | (19,012 | ) | | (2,157 | ) | | (693 | ) | | (7,541 | ) | | (40,167 | ) | | Future income taxes | | (43,851 | ) | | (75,557 | ) | | (1,475 | ) | | (3,460 | ) | | (11,436 | ) | | (135,779 | ) | | Future net cash flows, after income taxes | | 20,028 | | | 39,521 | | | 4,666 | | | 5,882 | | | 22,262 | | | 92,359 | | | Discount at 10% | | (8,070 | ) | | (17,474 | ) | | (2,087 | ) | | (2,673 | ) | | (13,591 | ) | | (43,895 | ) | | Standardized measure of discounted future net cash flows | | 11,958 | | | 22,047 | | | 2,579 | | | 3,209 | | | 8,671 | | | 48,464 | | | As of December 31, 2008 | | | | | | | | | | | | | | Future cash inflows | | 42,749 | | | 67,761 | | | 7,963 | | | 7,047 | | | 19,745 | | | 145,265 | | | Future production costs | | (8,593 | ) | | (15,372 | ) | | (4,040 | ) | | (1,942 | ) | | (5,224 | ) | | (35,171 | ) | | Future development costs | | (10,423 | ) | | (21,594 | ) | | (1,863 | ) | | (733 | ) | | (7,497 | ) | | (42,110 | ) | | Future income taxes | | (15,651 | ) | | (14,571 | ) | | (367 | ) | | (1,577 | ) | | (2,545 | ) | | (34,711 | ) | | Future net cash flows, after income taxes | | 8,082 | | | 16,224 | | | 1,693 | | | 2,795 | | | 4,479 | | | 33,273 | | | Discount at 10% | | (3,645 | ) | | (8,144 | ) | | (715 | ) | | (1,333 | ) | | (3,450 | ) | | (17,287 | ) | | Standardized measure of discounted future net cash flows | | 4,437 | | | 8,080 | | | 978 | | | 1,462 | | | 1,029 | | | 15,986 | | | As of December 31, 2009 | | | | | | | | | | | | | | Future cash inflows | | 50,580 | | | 107,679 | | | 18,804 | | | 9,013 | | | 32,004 | | | 218,080 | | | Future production costs | | (11,373 | ) | | (23,253 | ) | | (8,286 | ) | | (2,831 | ) | | (6,996 | ) | | (52,739 | ) | | Future development costs | | (12,795 | ) | | (21,375 | ) | | (5,728 | ) | | (698 | ) | | (6,572 | ) | | (47,168 | ) | | Future income taxes | | (17,126 | ) | | (36,286 | ) | | (1,293 | ) | | (2,041 | ) | | (5,325 | ) | | (62,071 | ) | | Future net cash flows, after income taxes | | 9,286 | | | 26,765 | | | 3,497 | | | 3,443 | | | 13,111 | | | 56,102 | | | Discount at 10% | | (3,939 | ) | | (13,882 | ) | | (2,696 | ) | | (1,558 | ) | | (8,225 | ) | | (30,300 | ) | | Standardized measure of discounted future net cash flows | | 5,347 | | | 12,883 | | | 801 | | | 1,885 | | | 4,886 | | | 25,802 | | | | Minority interests in future net cash flows as of | | | | | | | | | | | | | | December 31, 2007 | | 407 | | | 654 | | | — | | | — | | | — | | | 1,061 | | | December 31, 2008 | | 217 | | | (50 | ) | | — | | | — | | | — | | | 167 | | | December 31, 2009 | | 212 | | | 60 | | | — | | | — | | | — | | | 272 | | | | Group’s share of equity affiliates’ future net cash flows as of | | | December 31, 2007 | | — | | | 526 | | | 2,998 | | | 6,554 | | | — | | | 10,078 | | | December 31, 2008 | | — | | | 418 | | | 608 | | | 4,275 | | | — | | | 5,301 | | | | | Equity affiliates | | | Consolidated subsidiaries | | (M€) | | Europe | | Africa | | Americas | | Middle East | | Asia | | Total | | | Europe | | Africa | | Americas | | Middle East | | Asia | | Total | | As of December 31, 2009 | | | | | | | | | | | | | | | | | | | | | | | | | Future cash inflows | | — | | | 1,432 | | | 16,750 | | | 48,486 | | | — | | | 66,668 | | | | 50,580 | | | | 107,679 | | | | 18,804 | | | | 9,013 | | | | 32,004 | | | | 218,080 | | Future production costs | | — | | | (624 | ) | | (6,993 | ) | | (30,739 | ) | | — | | | (38,356 | ) | | | (11,373 | ) | | | (23,253 | ) | | | (8,286 | ) | | | (2,831 | ) | | | (6,996 | ) | | | (52,739 | ) | Future development costs | | — | | | (26 | ) | | (1,924 | ) | | (3,891 | ) | | — | | | (5,841 | ) | | | (12,795 | ) | | | (21,375 | ) | | | (5,728 | ) | | | (698 | ) | | | (6,572 | ) | | | (47,168 | ) | Future income taxes | | — | | | (245 | ) | | (3,650 | ) | | (1,843 | ) | | — | | | (5,738 | ) | | | (17,126 | ) | | | (36,286 | ) | | | (1,293 | ) | | | (2,041 | ) | | | (5,325 | ) | | | (62,071 | ) | Future net cash flows, after income taxes | | — | | | 537 | | | 4,183 | | | 12,013 | | | — | | | 16,733 | | | | 9,286 | | | | 26,765 | | | | 3,497 | | | | 3,443 | | | | 13,111 | | | | 56,102 | | Discount at 10% | | — | | | (239 | ) | | (2,816 | ) | | (6,383 | ) | | — | | | (9,438 | ) | | | (3,939 | ) | | | (13,882 | ) | | | (2,696 | ) | | | (1,558 | ) | | | (8,225 | ) | | | (30,300 | ) | Standardized measure of discounted future net cash flows | | — | | | 298 | | | 1,367 | | | 5,630 | | | — | | | 7,295 | | | | 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 | |
CHANGES IN THE STANDARDIZED MEASURE OF DISCOUNTED FUTURE NET CASH FLOWS | | | | | | | | | Consolidated subsidiaries | | (M€) | | 2009 | | 2008 | | 2007 | | | 2009 | | 2010 | | 2011 | | Consolidated subsidiaries | | | | | | | | Beginning of year | | 15,986 | | | 48,464 | | | 35,048 | | | | 15,986 | | | | 25,802 | | | | 36,033 | | Sales and transfers, net of production costs | | (17,266 | ) | | (26,109 | ) | | (19,095 | ) | | | (17,266 | ) | | | (22,297 | ) | | | (27,026 | ) | Net change in sales and transfer prices and in production costs and other expenses | | 35,738 | | | (81,358 | ) | | 56,678 | | | | 35,738 | | | | 30,390 | | | | 44,315 | | Extensions, discoveries and improved recovery | | (267 | ) | | 556 | | | 2,895 | | | | (267 | ) | | | 716 | | | | 1,680 | | Changes in estimated future development costs | | (4,847 | ) | | (2,227 | ) | | (6,491 | ) | | | (4,847 | ) | | | (7,245 | ) | | | (4,798 | ) | Previously estimated development costs incurred during the year | | 7,552 | | | 6,960 | | | 6,581 | | | | 7,552 | | | | 7,896 | | | | 9,519 | | Revisions of previous quantity estimates | | 164 | | | 2,693 | | | (6,521 | ) | | | 164 | | | | 5,523 | | | | 1,288 | | Accretion of discount | | 1,599 | | | 4,846 | | | 3,505 | | | | 1,599 | | | | 2,580 | | | | 3,603 | | Net change in income taxes | | (12,455 | ) | | 63,611 | | | (22,585 | ) | | | (12,455 | ) | | | (6,773 | ) | | | (16,925 | ) | Purchases of reserves in place | | 230 | | | 50 | | | — | | | | 230 | | | | 442 | | | | 885 | | Sales of reserves in place | | (632 | ) | | (1,500 | ) | | (1,551 | ) | | | (632 | ) | | | (1,001 | ) | | | (1,161 | ) | End of year | | 25,802 | | | 15,986 | | | 48,464 | | | | 25,802 | | | | 36,033 | | | | 47,413 | | | Equity affiliates | | | | | | | | | | | Equity affiliates | | (M€) | | | 2009 | | 2010 | | 2011 | | Beginning of year | | 5,301 | | | | | | | | 5,301 | | | | 7,295 | | | | 9,234 | | Sales and transfers, net of production costs | | (987 | ) | | | | | | | (987 | ) | | | (1,583 | ) | | | (1,991 | ) | Net change in sales and transfer prices and in production costs and other expenses | | 2,789 | | | | | | | | 2,789 | | | | 2,366 | | | | 3,715 | | Extensions, discoveries and improved recovery | | 407 | | | | | | | | 407 | | | | — | | | | — | | Changes in estimated future development costs | | (88 | ) | | | | | | | (88 | ) | | | 195 | | | | (383 | ) | Previously estimated development costs incurred during the year | | 854 | | | | | | | | 854 | | | | 651 | | | | 635 | | Revisions of previous quantity estimates | | (790 | ) | | | | | | | (790 | ) | | | 308 | | | | (749 | ) | Accretion of discount | | 530 | | | | | | | | 530 | | | | 730 | | | | 923 | | Net change in income taxes | | (721 | ) | | | | | | | (721 | ) | | | (728 | ) | | | (1,341 | ) | Purchases of reserves in place | | — | | | | | | | | — | | | | — | | | | 1,812 | | Sales of reserves in place | | — | | | | | | | | — | | | | — | | | | (624 | ) | End of year | | 7,295 | | | | | | | | 7,295 | | | | 9,234 | | | | 11,231 | |
OTHER INFORMATION Net gas production, production prices and production costs | | | Consolidated subsidiaries | | Consolidated subsidiaries | | | | Europe | | Africa | | Americas | | Middle East | | Asia | | Total | | Europe | | | Africa | | | Americas | | | Middle East | | | Asia | | | Total | | Year ended December 31, 2009 | | | | | | | | | | | | | | Natural gas production available for sale (Mcf/d)(1) | | 1,643 | | 480 | | 545 | | 297 | | 1,224 | | 4,189 | | Production prices(2) | | | | | | | | | | | | | | 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 | | | 40.76 | | | | 40.77 | | | | 36.22 | | | | 39.94 | | | | 37.66 | | | | 40.38 | | Bitumen (€/b) | | — | | — | | 23.17 | | — | | — | | 23.17 | | | — | | | | — | | | | 23.17 | | | | — | | | | — | | | | 23.17 | | Natural gas (€/kcf) | | 4.81 | | 1.33 | | 1.56 | | 0.72 | | 4.47 | | 3.70 | | | 4.81 | | | | 1.33 | | | | 1.56 | | | | 0.72 | | | | 4.47 | | | | 3.70 | | | Production costs per unit of production (€/boe)(3) | | | | | | | | | | | | | | Production costs per unit of production (€/boe)(c) | | | | | | | | | | | | | | Total liquids and natural gas | | 5.16 | | 4.22 | | 3.43 | | 3.69 | | 2.42 | | 4.16 | | | 5.30 | | | | 4.35 | | | | 3.59 | | | | 3.86 | | | | 2.52 | | | | 4.30 | | Bitumen | | — | | — | | 25.45 | | — | | — | | 25.45 | | | — | | | | — | | | | 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 | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | |
(1)(a) | The reported volumes are different from those shown in the reserves table due to gas consumed in operations. |
(2)(b) | The volumes used for calculation of the average sales prices are the ones sold from the Group’s own production. |
(3)(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. |
S-16S-19
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