Debt crisis 'could slow new oil projects'
Paris, May 13, 2010
The impact of the Greek debt crisis may not only squeeze global demand for oil but also make it harder for energy companies to finance new projects, a top executive at French oil major Total said.
Total and its industry peers, which invest billions of dollars each year to develop new fields, could see their access to borrowing curbed at a time when new oil reserves are increasingly difficult and costly to access.
'The Greek crisis can have an influence on production, on the financing of projects, and on the start-up of projects,' Yves-Louis Darricarrere, head of exploration and production, told Reuters in an interview at Total's headquarters.
Oil prices have been volatile since the European Union unveiled a $1 trillion rescue for the bloc's debt-stricken nations, swinging between a 19-month peak of $87.15 and a three-month low of $74.51. They were at $75.10 by 0900 GMT.
Darricarrere said oil volatility was likely to continue for some time, predicting prices would move within a wide range of $60-$100 per barrel in the coming months, although he remained bullish on longer term trends.
'In the longer term, we believe demand will continue to grow, not everywhere but the development of emerging countries means there will be a global growth in demand, a moderate one, but still growth. And it will be a challenge to meet that demand growth,' Darricarrere said.
'What's taking place globally now has a tendency to delay projects, meaning it will be harder and harder to produce.'
Total does not expect to start any major new project before the end of 2011 when the 220,000-bpd deep offshore Pazflor oil field, in which it has a 40 per cent stake, will start producing.
Looking further ahead, Darricarrere said the Paris-based company targeted trickier projects such as deep offshore fields, liquefied natural gas, oil sands and shale gas, with a high return on investment.
Total will likely join an auction later this year to develop three Iraqi gas fields - Akkas in the western desert, Mansuriyah in eastern Iraq and Siba in the southern oil hub of Basra - as the French major seeks a greater role in the Middle Eastern country, Darricarrere said.
'We are interested in principle. Now we need to see which conditions will be offered,' he said. 'We need our investments to be profitable. I don't see the interest in going for volumes just for the sake of volumes.'
He said Total was dissatisfied with the financial terms so far offered to develop Iraq's vast oilfields and the group remained determined not to slash its profit margins to win deals in the country holding the world's third-largest oil proven reserves.
In December, Total lost deals for the supergiant Majnoon and West Qurna fields as Royal Dutch Shell, Petronas, Lukoil and Statoil offered a remuneration fee that Total says would barely cover their costs.
Total won a minority share in the Halfaya field, which CNPC will operate, and which Darricarrere said will start production around 2012 at roughly 70,000 barrels per day before reaching a plateau of 530,000 bpd by 2015-2016.
'Total does not wish to remain in Iraq with only 18.75 per cent in Halfaya,' Darricarrere said. 'This doesn't mean we want to increase our stake in Halfaya. It just means ... that Iraq remains a country of interest and that we would like to develop more substantial partnerships than the Halfaya stake.'
Total is for instance still attracted by the Bin Umar field, which has not yet been put on auction by the Iraqi authorities.
Asked about Iran, Total said its discussions to develop the giant offshore South Pars natural gas field were at a standstill at a time when Tehran is pressuring foreign companies wary of investing due to the stand-off between the West and the Islamic Republic over the latter's nuclear programme.
'There is nothing new. We can have discussions with them but nothing is coming out of this. We see them from time to time,' Darricarrere said, adding it was crucial for future global oil supply and crude prices that a solution was found for Iran to rejoin the international community.-Reuters