Total eyes role in Australia gas, oil projects

Adelaide: French oil firm Total is looking for oil and unconventional gas projects in Australia in which it could take a role as operator, the company's chief executive said yesterday.

Australia is on its way to becoming the world's largest liquefied natural gas (LNG) exporter, with around $170 billion in projects under construction. Total already has minority stakes in two of those projects, and is looking to expand, Christophe de Margerie said.

"There are opportunities around unconventional gas and oil," he told reporters on the sidelines of an industry event in Australia.

"We are interested in the opportunities to develop our own activity, I mean by operating."

Total owns a 24 per cent stake in the Ichthys LNG project. It has agreed to raise that stake to 30 per cent, and the deal should get final agreement within a few weeks, he said. Total also owns 27.5 per cent of the Gladstone LNG project.

Labour costs

De Margerie will meet Australia Prime Minister Julia Gillard today and discuss the possibility of Total taking a bigger role in Australia's oil and gas sector then, he said. Labour costs in Australia were high but not enough to dissuade Total from investing in more projects, de Margerie said.

The most recent cost estimate for the Ichthys project is $34 billion, from an original estimate of $20 billion made in 2008. Simultaneous work on a swathe of energy and mining projects has driven up costs across the country.

Still, Australia's access to fast-growing Asian energy markets and its operating environment made it a good target for investment, de Margerie said.

Projects in Australia helped balance Total's portfolio, he added, which was otherwise skewed toward investment in developing countries.

Economic data

Recent weak Chinese economic data had led to no pullback for Total in projects focused on Asia's energy market, de Margerie said.

"We are a long-term industry. We don't do things based on one-day this, one-day that," he said.

"We know that in the long term Asia will need a lot of additional oil and gas to cover demand. China and others in the region will still need more energy."

There was enough oil supply in the market to absorb the impact of international sanctions on Iran, de Margerie said. He declined to estimate how much European and US sanctions would impact Iran's around 2.2 million barrels per day of exports, but said oil markets had already priced in disruption.

"The market doesn't believe it will have that much impact otherwise the price of oil would have climbed to a higher level," he said. "So you have the answer in the market."