Engineering News

Total CEO: Refining Demand Weak; Too Much Capacity
September 04, 2009

Demand for refined petroleum products remains low and the refining industry has too much capacity, French oil major Total SA's (TOT) chief executive told reporters Friday, also saying he isn't worried that the rating agency Standard & Poors has revised its outlook on Total.

The company's recent decision to halt its Dunkirk refinery until market conditions improve isn't a "restructuring measure," but a way to react to a market environment that doesn't allow the unit to stay open, Christophe de Margerie told reporters on the sidelines of a business conference near Paris.

"For the moment, demand is weak and there is too much capacity," he said.

While Total hopes demand will pick up again, de Margerie said that efforts to reduce consumption for environmental reasons mean that, in the medium and longer-term, "it will also be necessary to find a balance between a will to reduce consumption and capacity."

But that would amount to restructuring, he said, insisting that current tweaks such as halting the Dunkirk unit are "a reaction to a market phenomenon that I hope is temporary."

De Margerie also said he isn't worried about credit rating agency Standard & Poor's revising its outlook on Total to "negative" from "stable."

"It simply means that they observe that we have taken an important decision to continue to invest and to maintain the dividend policy at a time of weaker prices," he said.

"Since we believe in a return to a more favorable environment in the months and years to come, we don't have any reason to stop our investments," he added.

Source: Dow Jones Newswires

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