PRESENTATION TO FOURTH IEA-IEF-OPEC SYMPOSIUM ON ENERGY OUTLOOKS Nathalie BRUNELLE Senior VP Strategy, Development, Research Refining & Chemicals January 22, 214 Riyadh, Saudi Arabia
janv.-7 juin-7 nov.-7 avr.-8 sept.-8 févr.-9 juil.-9 déc.-9 mai-1 oct.-1 mars-11 août-11 janv.-12 juin-12 nov.-12 avr.-13 sept.-13 US FEEDSTOCK ADVANTAGE : ALREADY A REALITY Price evolution* $/t Ethylene production Mt/y EU Naphta 34 North America 3 US Ethane 26 22 27 29 211 213 18 2 24 28 212 US plants benefiting from low price of feedstock and energy 2
THE US ENERGY REVOLUTION & PETROCHEMISTRY 9 8 Evolution of US gas production* (Bcfd) kbd 2 1 U.S. ethane balance 7 1 9 6 1 7 5 4 1 5 Ethane resources 3 2 1 25 21 215 22 1 3 1 1 9 Ethane demand Ethane supply 21 215 22 Conventional Shale CBM * Source : Total estimations 3
MORE NEW CAPACITIES TO COME IN ETHYLENE 14 29-18 change in global ethylene capacity Mt/y 12 1 8 6 4 2 12 8 4 Additional demand 13-18 +3.2%/y US projects on ethane to add 3% regional capacity, essentially dedicated to PE derivatives ME projects based on mixed feedstock and allowing more diversified downstream -2-4 -4 29 211 213 215 North America Asia 217 Naphtha based production represent now less than 5% of world ethylene Middle East Rest of world US to become a major exporter of ethylene derivatives 4
AND PROPYLENE 7 29-18 change in global propylene capacity Mt/y 6 6 5 4 3 2 4 2 Additional demand 13-18 +4.3%/y Around 23% to come from alternative feedstock (propane, coal, methanol) in 218 compared with 12% in 212 1-1 US excess of propane to be exported overseas -2-2 29 211 213 215 217 Middle East North America Rest of world Asia New routes for propylene production appear with attractive feedstock price 5
TO FEED GROWING GLOBAL MARKET Global polymer demand Mt/y* Plastic consumption per capita* Kg/cap/y 3 +3.1% +3.9% +3.9% 7 6 North America 2 5 Western 4 Eastern 1 3 China 2 World 98 3 8 13 18 1 India North America China Rest of Asia Middle East Rest of world 198 1985 199 1995 2 25 21 215 x% Compound annual growth rate * Perimeter : PE, PP, PS, PET, PVC *Perimeter: PE/PP/PS Will East of Suez growing demand continue to absorb additional capacity? 6
NORTH AMERICA TO ARBITRATE ON PE EXPORTS North America Africa Middle East Asia PE trade flows (MT) South America North American exports to target growing South American markets but also Asia and 7
WITH NO LOCAL COMPETITIVE FEEDSTOCK AND LIMITED MARKET GROWTH, EUROPEAN PETCHEM INDUSTRY HAS TO ADAPT an ethylene production capacity 2 22 24 26 28 21 212 214 216 218 Steamcracker operating rates 95% 9% 85% 8% 75% End-212 an ethylene capacity : 26 Mt/a 7% Restoring utilization rates Increasing imports from US and Middle-East Estimated 15% capacity reduction need over 213-22 8
BENEFITING FROM THE ENVIRONMENT TO GET STRONGER Manage a sizeable diversified portfolio Restructure and develop leading integrated platforms Deliver innovative products Develop sustainable processes and products Our strategy : safe and reliable refining-petrochemicals focused on increasing value and redeploying towards growing markets 9
TOTAL : MAJOR GLOBAL PLAYER IN PETROCHEMICALS 5 Petrochemicals players 212 global capacity in Mt* TOTAL s global capacity at end-213 (including share in Satorp) 4 3 2 world 9 e and 2 nd in 2 % of global polyethylene capacity 11%for polystyrene NAM Asia Middle-East 1 Olefines Aromatics (including PX) PE Middle-East Asia PP PS North America RoW * Portfolio: Ethylene + Propylene + Benzene + Toluene + Mixed Xylenes + Polyethylene + Polypropylene + Polystyrene + EPS + PET + PVC Other A sizeable and diversified petrochemicals portfolio 1
TAKING UP THE CHALLENGE ON KEY PLATFORMS Priority to investments on integrated platforms with feedstock diversification : Normandy, Antwerp Reducing petrochemicals exposure : Antwerp NC1, Carling Differentiate polymer products on higher value markets Americas Port Arthur cracker: maximizing ethane and LPG cracking Benefiting from leading positions in polypropylene and polystyrene Studying ethane side cracker project Middle East and Asia Developing 3 of the world s best performing platforms Green light for coal-to-olefin project in China 11
BENEFITING FROM INTEGRATION BETWEEN REFINING AND PETROCHEMICALS BEYOND PRODUCT EXCHANGE Unique optimized platforms Refining Naphtha, LPG, refinery offgas, propylene, aromatics, Synergies expected from TOTAL s new R&C organization Net operating income First synergies in Normandy and Antwerp Renegotiated energy contracts First benefits of rightsizing central services 25 M$ 1 M$ Petrochemicals Hydrogen, steam, low sulphur fuel oil, pyrolysis Gasoline 213 214 215 217 Leveraging on single site management, common infrastructures and size effect
QUESTIONMARKS AND CHALLENGES FOR A MAJOR PLAYER Demand growth in LAM and Asia Markets Shale hydrocarbons phenomenon (magnitude, logistics, other regions?) Gas exports from the US et potential impact on prices LPG associated production, swing demand and world trade flows Operational Excellence & Leading Innovation Operations Access to competitive feedstock and energy Pace of restructuring People Skills and know-how 13