Total SA to overhaul refining, petrochem, marketing businesses: No sale on the cards

11-Oct-11

Total SA’s overhaul of its refining, petrochemicals and marketing businesses is not in preparation for a sale, said Chief Executive Officer Christophe de Margerie, as per Bloomberg There is no planned IPO or sale,” he said at a briefing to discuss the merger of the refining and petrochemicals divisions and creation of a separate fuel- marketing operation. “One can never say never, but our biggest preoccupation is to make this tool better performing.” Total, Europe’s biggest refiner, said there won’t be job cuts following the reorganization. However, there is urgency because the market is bad, as the European market is not growing. Refining margins that were negative in August and early September, have now climbed to about US$22/ton. Refining has been reduced through the closure of its plant near Dunkirk in France, capacity reduction at Normandy and the sale of its 49% stake in Spain’s Cia. Espanola de Petroleos SA. Total is also trying to sell its Lindsey plant in the U.K. This reorganization may not be complete, and could see further restructuring and closures. Total will have the broad outline of the overhaul ready by January and it may be complete a year after that. The move could be accompanied by salary increases in the petrochemicals division to bring them in line with refining, although costs of the reorganization will be minimal, he said. The aim of the plan is to “unlock value” for the activities, even in European and U.S. markets where demand for fuel products is decreasing, he said. “I think we can make refining and chemicals profitable in Europe.”