VZCZCXRO5661
PP RUEHIK
DE RUEHFR #1413/01 2941024
ZNR UUUUU ZZH
P 211024Z OCT 09
FM AMEMBASSY PARIS
TO RUEHC/SECSTATE WASHDC PRIORITY 7379
RUCPDOC/USDOC WASHDC PRIORITY
INFO RUEHZL/EUROPEAN POLITICAL COLLECTIVE

UNCLAS SECTION 01 OF 02 PARIS 001413 
 
SENSITIVE 
SIPDIS 
 
STATE FOR EB, S/EEE, S/CIEA and EUR/WE 
 
E.O. 12958: N/A 
TAGS: EPET ECON EINV PREL FR IR KZ NI RS SU BM
SUBJECT: France: Total SA's Investment Projects 
 
PARIS 00001413  001.2 OF 002 
 
 
SENSITIVE BUT UNCLASSIFIED - CONTAINS COMMERCIALLY SENSITIVE 
INFORMATION -- NOT FOR INTERNET DISTRIBUTION 
 
SUMMARY 
------- 
 
¶1.  (SBU) Total SA executives gave Deputy Assistant Secretary 
Douglas Hengel an overview of investment activities in some of the 
world's political hotspots.  On Iran, they denied talks had resumed 
on phase 11 of the South Pars gas field but expressed frustration 
over Chinese companies entering the market.  Total is not a major 
supplier but does sell refined petroleum products to Iran.  Total 
will partake in upcoming talks on Iraqi oil fields not in production 
and has a strong interest in Majnoon.  The French oil major spoke 
out against President Sarkozy's support of an oil price band.  In 
Nigeria, the company's financial exposure is great given the new 
terms of the Petroleum Industry Bill.  Total finds the Extractive 
Industries Transparency Initiative useful and is committed to making 
it work, but has concerns about the proposed U.S. Energy Security 
and Transparency Act.  Total refutes allegations of wrongdoing 
related to its activity in Burma.  Globally, Total's future 
investment priorities for the firm include nuclear energy, solar 
power, and second generation biomass, but not wind.  End Summary. 
 
¶2.  (U) On October 13, Deputy Assistant Secretary for Energy, 
Sanctions and Commodities, Douglas Hengel and Econoff met with the 
following TOTAL representatives: 
 
- Hubert Loiseleur des Longchamps, Senior Vice President 
International Relations. 
- Cherif Castel, Deputy Vice President, International Relations 
- Thierry Bourgeois, Exploration and Production, Africa Division, 
Vice President Nigeria. 
 
Iran 
---- 
 
¶3.  (SBU) Total denied press reports that talks on phase 11 of the 
South Pars (PS11) gas field had resumed.  Technical, financial, and 
contractual obstacles prevent this from moving ahead, Loiseleur 
said, and the Iranians do not appear motivated to push the deal 
forward.  For now "there is no agreement to sign", he insisted. 
(Note: Cherif Castel later confirmed that Total has been in talks 
with Iran on a separate "LNG Pars" production project.  They are 
discussing an appropriate legal framework for the deal.  End note.) 
Total's long term goal is to resume discussions with Iran on SP11, 
Loiseleur reiterated, but the company fears that they and other 
Western companies will lose out to the Chinese who are proceeding to 
lock up as many deals as they can in Iran. 
 
¶4.  (SBU) DAS Hengel mentioned that there might be more U.S. 
legislation to tighten sanctions.  He asked if Total is selling 
refined oil products to Iran.  Like other international energy 
companies, that remains an option for Total, Loiseleur replied, 
given the current amount of excess refined products on the market. 
Total is not a major supplier but has sold some gasoline to Iran in 
the past.  He stated that Total's activity is legal and not covered 
by the Iran Sanctions Act. 
 
Iraq 
---- 
 
¶5.  (SBU) Turning to Iraq, Total plans to participate in the second 
bid round talks on oil fields not in production, Loiseleur 
confirmed.  Like other oil majors, Total wants to be part of the 
Majnoon field development.  Loiseleur realizes it will require a lot 
of wells, compressors, a pipeline to get the oil to shore, and 
complete upgrades to the existing export facilities. 
 
G8: Oil Price Band 
------------------ 
 
¶6.  (SBU) Loiseleur said Total is not in favor of President 
Sarkozy's and Prime Minister Brown's support for using oil price 
bands to curb price volatility.  Total has talked with President 
Sarkozy on this and "it appears he is getting the message", 
Loiseleur stated without elaborating. 
 
Russia - Shtokman gas project 
----------------------------- 
 
¶7.  (SBU) Total's VP for International Relations estimated that a 
final decision on the Shtokman project would be ready by the end of 
next year and production could start in 2013.  Total later confirmed 
October 12 reports that CEO Christophe De Margerie announced during 
the World Gas Conference that initial production would be delayed 
and likely to start in 2015/2016. 
 
Nigeria 
 
PARIS 00001413  002.2 OF 002 
 
 
------- 
 
¶8. (SBU) Nigeria's proposed Petroleum Industry Bill would negatively 
impact joint venture stakeholders by compromising new investment, 
including gas generation and development, Total executives said. 
Current licenses need legal protection and Total should have the 
priority when they come to term, provided it fulfilled the 
conditions of the license, Loiseleur believes.  Yet the Bill's new 
relinquishment terms mean some of Total's blocks can be put on the 
market early and the Chinese are reportedly making offers 
substantially higher than the going price, he told us.  "We think 
Nigeria is testing the market", Loiseleur said.  The situation 
constitutes Total's biggest financial exposure, he added.  It is 
unclear who has the most influence at the presidential level but the 
right message is not getting through.  On security, Total has not 
had to halt production, but it is clear the GON needs to take 
charge, Total VP for Nigeria, Thierry Bourgeois noted. 
 
Kazakhstan 
---------- 
 
¶9. (SBU) Asked about recent press reports of President Sarkozy's 
visit to Kazakhstan during which he announced a Total deal to 
develop the Russian-Kazakh Khvalynskoye field, Loiseleur said the 
Production Sharing Agreement with KazMunaiGas (KMG) had been in 
preparation for over five years.  Sarkozy's visit coincided with the 
signing but was unrelated to the negotiations, Total executives 
claimed.  (Note: According to Total's press release, the firm bought 
a 17 percent stake of Khvalynskoye from the initial 50 percent 
interest held by KMG.  Russia's Lukoil owns the other 50 percent of 
Khvalynskoye.  The gas will be transported to Russia.  End note.) 
 
Other Areas of Concern 
---------------------- 
 
¶10.  (SBU) On Burma, Total publicly denied accusations of corruption 
and human rights violations made by EarthRights International in its 
September report.  As for the Extractive Industries Transparency 
Initiative (EITI), Total believes it is a useful initiative and the 
company is committed to making it work.  Governance is the weak 
point in this sector, Loiseleur emphasized and others need to 
address this issue, not the international oil companies.  He voiced 
concern about the proposed Energy Security and Transparency Act 
introduced in the US Senate requiring companies listed on US stock 
exchanges to disclose their extractive payments to foreign 
governments.  He argued that if this legislation becomes law, Total 
and other companies, plus many implementing countries, would end 
their involvement in EITI. This would set back the transparency and 
good governance agenda, which benefits from the volQary nature of 
EITI, and the USG would be charged with neo-colonialism by some 
resource producers. 
 
Future Investments 
------------------ 
 
¶11.  (SBU) Total sees nuclear energy, solar power, and second 
generation biomass as parts of its future, Loiseleur asserted.  The 
company intends to participate financially and help build European 
Pressurized Reactors in Abu Dhabi and Penly (France) alongside 
Areva, EDF and GDF-Suez.  Total also is looking at unconventional 
gas, he added, but decided against investing in wind power projects. 
 
 
Comment 
------- 
 
¶12.  (SBU) Total's long term strategic interest in Iran has not 
changed although the South Pars gas project is at a standstill.  The 
short term political conditions and technical and financial 
obstacles prevent the project from moving forward.  Like other 
European oil companies, Total is concerned that the Chinese will 
squeeze them out of the market.  Total sees nuclear energy as an 
important part of its long-term future and has Sarkozy's political 
support to proceed as demonstrated by their participation in nuclear 
reactor projects in the UAE and France.  End comment. 
 
(U) This cable has been cleared by DAS Hengel. 
 
RIVKIN