AFFORDABLE, RELIABLE AND CLEAN ENERGY HOW WE DO BUSINESS IN THE UK 2016/17 TOTAL IN THE UK | HOW WE DO BUSINESS IN THE UK 2016/17 AFFORDABLE, RELIABLE AND CLEAN ENERGY TOTAL IS THE WORLD’S FOURTH LARGEST INTERNATIONAL OIL AND GAS COMPANY, BACKED BY NEARLY A CENTURY OF HISTORY AND WITH OPERATIONS IN MORE THAN 130 COUNTRIES. Engaged in every sector of the oil and gas industry, renewable energies and power generation sectors, our ambition is to become the responsible energy major. To accomplish this, we are leveraging our integrated business model to capture synergies between the different activities of the Group, using our operational excellence, technological expertise and capacity to manage complex projects. Our ambition: to become the responsible energy major The next 20 years poses three major energy challenges: fulfilling the energy requirements of a growing world AFFORDABLE, population, tackling climate issues and RELIABLE AND anticipating changing customer needs and expectations. We believe we have CLEAN ENERGY a responsibility to provide tangible solutions. That means first of all providing affordable, reliable and clean energy. That’s why we’re developing a production mix that takes into account the International Energy Agency’s 2°C scenario and monitoring the energy efficiency of our facilities. We are determined to find innovative solutions for the new ways our customers use energy and to help them to do so more responsibly. HOW WE DO BUSINESS IN THE UK 2016/17 That’s what it means to be “Committed to Better Energy.” Cover: Our number one strength is our people. Strong, confident teams working together to drive progress. Situated in North Lincolnshire, Lindsey Oil Refinery has been operational and part of the local community since 1968. ©Total/Michel Labelle TOTAL IN THE UK | HOW WE DO BUSINESS IN THE UK 2016/17 01 CONTENTS INTRODUCTION OUR BUSINESS IN THE UK AFFORDABLE ENERGY PAGE 02 PAGE 06 RELIABLE ENERGY PAGE 08 CLEAN ENERGY PAGE 12 CONTACTS PAGE 20 PAGE 16 02 TOTAL IN THE UK | HOW WE DO BUSINESS IN THE UK 2016/17 INTRODUCTION FROM ELISABETH PROUST AND MICHAEL BORRELL WITH A CONSTANT FOCUS ON SAFETY, BY CAREFULLY MANAGING COSTS, DELIVERY AND SOLUTIONS TO CLIMATE CHANGE, WE WILL MEET OUR AMBITION TO BECOME THE RESPONSIBLE ENERGY MAJOR. Below: Michael Borrell, Chairman of Total Holdings UK and Elisabeth Proust, UK Country Representative Above: The Elgin Franklin fields: using high pressure/high temperature technology to recover oil and gas from the UK’s deepest producing reservoirs. Below: Every year, Total publishes a report showing how climate is being integrated into its business strategy. www.total.com TOTAL IN THE UK | HOW WE DO BUSINESS IN THE UK 2016/17 03 Context and Strategy By improving energy efficiency, reducing We operate in a complex economic the carbon intensity of our production international environment marked mix and accelerating the development by continued price volatility and that of renewable energies, our ambition is to volatility is not likely to decrease. We position Total as a global leader in these need to concentrate on what we can do three priority areas and drive progress. and do it well – manage the challenges We have evolved our organisation to by implementing a sustainable capital achieve the 20 year ambition. A new expenditure policy, remain competitive, Gas, Renewables and Power division maintain a high level of operational will spearhead our ambitions in the excellence and, first and foremost, be growth of renewable energies and a exemplary in the area of safety. Safety Strategy-Innovation division, under the is a prerequisite. We believe the best leadership of an Executive Committee run operations are also the safest, so board member, to ensure our strategy by improving safety, we consequently incorporates climate issues. Our portfolio improve efficiency. Today safety is more is moving more to gas, an abundant than a priority; it is a core value, the energy source, to assist the transition to cornerstone of success and sustainability lower carbon forms of energy. When it in our business. comes to generating power, gas is the best Operating costs have come down from fit for renewables since it can offset their US$10 per barrel to under US$6 per intermittency thanks to its flexibility. barrel in the period 2014 to 2016. This Acquisitions in 2016 of SAFT, a leading is reflected in our results, where Total’s provider of energy storage solutions, and strategy to lower the break-even point Lampiris, reflects our strategic expansion and increase cash flow is proving in gas and power marketing activities. successful. Our integrated business Our achievements in ensuring the model, along the full value chain of oil success of projects and our ability to and gas, stretching from exploration and manage complex developments, means production to the distribution of products we are consolidating our position as one to the end customer, through refining, £7.1BN of the world’s leading energy majors. Turnover in 2016 petrochemicals and trading, has been We have been able to start capitalising pivotal in our ability to successfully on that position by engaging in new address the challenges we are facing. opportunities around the world: such At the same time, we want to contribute as liquefied natural gas and Barnett shale £561M to the solutions that are needed for the in the US since 2016, increasing our Capital investment in the UK future of energy and, in particular, presence in Uganda, Middle East, Iran, decarbonising energy. Fulfilling the Korea, Algeria, a major project in Brazil energy requirements of a growing world with Petrobas, and expanding our population, while addressing climate marketing and services business in East 14.5% issues and adapting to changing Africa. In August 2017, Total acquired of all gas extracted from customer behaviours and expectations, 100% share of E&P company Maersk Oil & British waters is by Total are three challenges that Total must meet Gas A/S, deepening and accelerating our over the coming years. strategy for value creation and delivering significant synergies. Our strategy is to become the responsible 12.2% energy major, providing affordable, We continue to focus on core activities Total Group shares held in the UK reliable and clean energy. With a constant to deliver strong results. We have focus on safety, by carefully managing made efforts to bring costs down and costs, delivery and solutions to climate restructure the business to deliver change, we will meet this ambition. our objectives and manage cash. Our strategy, under the 20 year ambition, will 2,536 This strategy, consistent with meeting People are directly employed in the UK ensure the business is resilient to external the International Energy Agency’s 2°C pressures, responsive to customer needs scenario, will provide safe, affordable and responsibly delivers energy across energy solutions to as many people the markets in which we operate. as possible whilst managing energy consumption and the related emissions. 04 TOTAL IN THE UK | HOW WE DO BUSINESS IN THE UK 2016/17 INTRODUCTION CONTINUED Below: Developing technologies for the future and digitalisation are a key part of our strategy. WE ARE THE UK’S LEADING ENERGY MAJOR AND CONTINUE TO GROW OUR MARKET SHARE. How Total is responding in the UK Since then we have also completed the Total has over five decades of doing Edradour-Glenlivet project. These two business and has invested more than satellite wells have been developed under £5 billion in the last five years. We are budget and ahead of schedule. actively working on implementing the We have completed the restructuring 20-year ambition across UK operations. of the Total Lindsey Oil Refinery in Naturally, the return of oil price volatility North East Lincolnshire. The Refinery’s has put the entire UK energy industry production capacity and organisation IN THE UK, TOTAL under pressure. With the North Sea basin has been streamlined to become a now very mature, prospects are smaller smaller but higher converting and HAS OVER FIVE and more difficult to develop. Therefore profitable refinery. The organisation’s margins are tight and exploration restructure has been achieved without DECADES OF costly. As part of our restructuring, compulsory redundancies and through we have divested our UK mid-stream redeployments that have created new DOING BUSINESS gas transportation assets in order to opportunities for employees. The AND HAS reduce our invested capital. adaptation has enabled us to improve our efficiency and enhance competitiveness Nevertheless, we remain committed by reducing costs and cash breakeven. INVESTED MORE to the North Sea as part of our global strategic position. Our focus is, therefore, Developing technologies for the future THAN £5 BILLION on ensuring lower costs, better safety and and digitalisation are a key part of our stable production from our UK assets. strategy and we continue important IN THE LAST work with universities across the UK and In Shetland, we brought the Laggan- new R&D-focused bodies, such as the Tormore fields on-stream early last year FIVE YEARS. Oil & Gas Technology Centre. and quickly ramped up production. TOTAL IN THE UK | HOW WE DO BUSINESS IN THE UK 2016/17 05 We want to expand our energy efficient The opportunities in the UK, as well as its offerings, with a range of Fuel Economy influential position in the global energy lubricants and by increasing the blend market, means that this country is, and of biofuels in our fuel by 7%. We are continues to be, a major market. We exploring opportunities for renewable are the UK’s leading energy major and energy with SunPower at two UK sites, continue to grow our market share. and we want to increase the number of We are a leading producer on the United renewable producers we buy from, adding Kingdom Continental Shelf.