Total S.A. Business Information, Profile, and History

24, cours Michelet
92800 Puteaux
France

History of Total S.A.

TOTAL S.A. is one of the largest oil, natural gas, and specialty chemicals companies in the world. Its activities are organized into three main areas: upstream, downstream, and chemicals. TOTAL's upstream sector consists of the exploration for and production of crude oil and natural gas, along with development activities in gas and electricity and operations in coal mining; its downstream unit focuses on refining, marketing, and trading of petroleum products; while the chemicals sector includes rubber products made by its Hutchinson subsidiary (the bulk of which are products for the automotive industry), resins, paints, inks, and adhesives. The French state held a more than one-third stake in TOTAL for much of the company's history, but by 1996 France owned less than one percent.

Roots in World War I French Oil Crisis

The motto of the Compagnie Fran&ccedilse des Pétroles (as TOTAL was first named)--France's oldest and, for most of its life, largest oil company--at its foundation in 1924 might well have been "never again." World War I had brought home to the French the need for secure energy supplies. In late 1917 France had come within three months of running out of fuel and seeing its war effort grind to a halt. President Georges Clemenceau addressed a desperate appeal to U.S. President Woodrow Wilson, asking him to resume American oil shipments across the Atlantic. The U.S. oil companies had concluded that the German navy had made the North Atlantic trade too hazardous. Wilson persuaded them to think again.

The French were latecomers to the oil business. At the turn of the century the Americans and the Russians, with their huge domestic resources, had supplied 90 percent of the world's oil needs. Since then, the British had developed a powerful presence through the activities of the Anglo-Persian Oil Company&mdashøday's British Petroleum--and Royal Dutch/Shell.

If the war engendered among the French an awareness of their desperate need for oil, it also created the opportunity for them to acquire it. The key was the 25 percent stake in the fledgling Turkish Petroleum Company (TPC) held by Germany's Deutsche Bank.

The TPC had been founded in 1911 to exploit the oil fields of Mesopotamia on either side of the German-built railway to Baghdad. The British-owned National Bank of Turkey had originally been TPC's major shareholder with 50 percent, but in 1914 the British government persuaded the bank to sell out to Anglo-Persian. A further 25 percent was held by Royal Dutch/Shell.

In 1915 the 25 percent stake in TPC still held by Deutsche Bank was sequestered by the British. Two years later, letters were exchanged between the British Foreign Office and the Quai d'Orsay in Paris, committing the British government to hand over Deutsche Bank's shares in TPC to the French after the war.

The go-between had been the Armenian businessman Calouste Gulbenkian, an early minority shareholder in TPC. Royal Dutch/Shell was won over to the idea on the understanding that it would have the right to get France's share of the oil out of the ground.

To this end, the Société Fran&ccedilse pour l'Exploitation du Pétrole was founded in 1920, owned 51 percent by Royal Dutch/Shell and 49 percent by the Banque de l'Union Parisienne. Deutsche Bank's 25 percent share in TPC had been formally transferred to the French under the Treaty of San Remo earlier that year.

CFP Founded in 1924

Four years later a new French government under Raymond Poincaré concluded that it was unacceptable that a foreign company should control the exploitation of France's oil rights in Mesopotamia, and the Compagnie Fran&ccedilse des Pétroles (CFP) was established.

CFP's purpose was spelled out by Prime Minister Poincaré in a letter to the company's first chairman, Ernest Mercier. The new company's function was wide-ranging and not limited to Mesopotamia. In the interests of developing an oil producing capacity "under French control," Mercier was charged with acquiring stakes in "any enterprise active in whatsoever oil producing region" of the world. Central and South America were mentioned specifically. CFP was also to "co-operate, with the support of the Government, in ... exploiting such oil wealth as may be discovered in France, her colonies and her protectorates."

Notwithstanding its close government tutelage, the Compagnie Fran&ccedilse des Pétroles was set up as a private, not a state-owned, firm. Mercier, who had formerly been chairman of the Franco-British oil company Steaua-Romana, showed great energy in drumming up shareholders from a nation which had hitherto shown little enthusiasm for investing in the high-risk oil business.

He found backers among the French banks and also among the oil distributing companies, which had to this time been dependent on the foreign companies for their supplies. Although the support of powerful distributors such as Desmarais Frères was a boon at the outset, it later came to restrain CFP's freedom of action. Before World War II the company was effectively blocked from retailing oil that it had produced, transported, and refined, because of the powerful vested interests of its own shareholders.

On October 15, 1927, the Turkish Petroleum Company struck oil--a large find--at Baba Gurghur in the Mosal field just to the north of Kirkouk in Iraq. The discovery at Baba Gurghur ended a debate among the TPC shareholders, some of whom wanted to receive dividends on their investments, others of whom wanted to be remunerated in crude oil. The French had favored crude, having no oil fields of their own; after Baba Gurghur they received it.

Another result of the strike was the 1928 restructuring of the TPC. The Americans had been clamoring for admittance for years. In 1928 Anglo-Persian, acting on a deal hammered out between the British and American governments in 1923, ceded half its stake to a consortium of five U.S. oil companies. The return of Calouste Gulbenkian as "Mr. Five Percent" left the Compagnie Fran&ccedilse des Pétroles holding 23.75 percent, on a par with Anglo-Persian, Royal Dutch/Shell, and the American consortium.

The shareholders in the TPC signed a nonaggression pact known as the Red Line Agreement after Gulbenkian's gesture in ringing a large area of the map of the Near and Middle East with red crayon. The area within the red line corresponded to the old Ottoman Empire at the end of World War I. It encompassed Turkey, Syria, Saudi Arabia, Lebanon, Iraq, and Palestine. Within that region the TPC shareholders, now including the American giants Standard Oil of New York and Standard Oil of New Jersey, undertook not to compete with one another.

Entered Refining in 1929

Meanwhile in France CFP was undergoing restructuring of its own. Mercier was coming up against opposition from some of the company's shareholders to his cherished plans to launch CFP into refining. Certain of the oil distributors backing CFP objected. They had built up close relationships with foreign refiners and they did not want these disrupted.

Mercier turned to his friend Raymond Poincaré, once again prime minister. Together they elaborated a plan for the French state to acquire a 25 percent stake in CFP and a 10 percent stake in a new refining subsidiary to be created by CFP, the Compagnie Fran&ccedilse de Raffinage.

The official convention between the government and CFP which enshrined this new shareholding relationship was signed on March 19, 1929. It provoked a great political hue and cry, with the socialists under Léon Blum clamoring for greater state involvement and the right complaining that Poincaré's dirigisme--or interventionism--already went too far.

In the end it was the dirigistes who won. On July 8, 1931, the French parliament ratified an increase in the state's stake in CFP from 25 percent to 35 percent--the level at which it stayed until the early 1990s. The state also acquired 40 percent of the voting rights at CFP assemblies and the French government was authorized to nominate two commissioners for the company's board to safeguard the state's interest.

From Ernest Mercier's point of view it was a satisfactory outcome. He had won political support for his refining project and translated that support into boardroom control. However, the government's increased participation in CFP fell very far short of thoroughgoing nationalization. The risk of politically motivated interference in the day-to-day running of the company was averted.

The Compagnie Fran&ccedilse de Raffinage (CFR) was founded in April 1929. Its first refinery was opened at Gonfreville near Le Havre in Normandy in the summer of 1933. It had to wait until the next year for the first shipment of CFP's own oil from Iraq; the necessary pipeline from the wells to the Lebanese port of Tripoli was not in operation until July 1934.

In the years up to World War II CFR's refining capacity grew steadily, outstripping CFP's ability to supply it with crude. Further crude shipments came from Venezuela and the United States. By 1936 CFR was supplying nearly 20 percent of French demand for refined oil from two plants located at either end of the country, one in Normandy and the other at La Mède in Provence.

By 1929 the Turkish Petroleum Company had long since ceased to have anything to do with Turkey. Its oil came from Iraq under a concession awarded by the Iraqi monarch, King Feizal, installed by the British in 1921. Appropriately enough, TPC changed its name to the Iraq Petroleum Company in June 1929.

The renamed company's major task in the early 1930s was to transport its recently discovered oil from Iraq to the Mediterranean. Plans for a single pipeline were scuttled by French insistence that the oil should pass through the French protectorates of Syria and Lebanon, and Britain's determination that it should cross Jordan and Palestine, territories then under the protection of his majesty's government. These opinions proved irreconcilable, and two pipelines were laid, one to Tripoli in Lebanon and the other to Haifa in Palestine. The oil came on stream at both ports in 1934.

Another link in the chain between the extraction of CFP's share of the Iraqi oil and its distribution to French consumers was forged in 1931. CFP set up the Compagnie Navale Des Pétroles to ship its own oil to its own refineries. In the prewar years it shared this task with the Compagnie Auxiliaire de Navigation, one of CFP's founding shareholders. Much later, in the 1970s, CFP was to take control of the Compagnie Auxiliaire.

Vertically Integrated Oil Company by World War II

By the outbreak of World War II, the Compagnie Fran&ccedilse des Pétroles had become a vertically integrated oil company, extracting, transporting, and refining oil. It had two weaknesses. One, the lack of any meaningful distribution capacity, was remedied in the 1950s with the creation of the TOTAL brand name and the gradual absorption of the independent distributors. The other was the company's heavy reliance on Middle Eastern oil. The balanced supply from around the world which Raymond Poincaré had hoped for in 1924 had not been achieved.

Far more worrying for the French during the war were the designs of CFP's fellow shareholders in the Iraq Petroleum Company (IPC) regarding the French 23.75 percent stake. CFP's stake in the IPC was put under the control of the official Custodian of Enemy Property in London after the French capitulation. The risk for CFP was that its participation in IPC could be reduced by new share issues to which it was powerless to subscribe.

Fortunately--and fortuitously--this change did not occur. CFP had a "war chest" of US$20 million held by its American bankers which enabled it to keep pace with the wartime recapitalization of IPC. The bulk of this money--US$15 million--had been borrowed from the Mannheimer Bank in the Netherlands just before the war to fund two new pipelines to Tripoli. The remaining US$5 million belonged to the Compagnie Fran&ccedilse de Raffinage.

The French interests in IPC were tended to by Harold Sheets, the chairman of Standard Oil of New York, to whom they were entrusted by CFP's new chairman, Jules Mény, in 1940. Ernest Mercier had resigned that year, being out of favor with Vichy. Calouste Gulbenkian also remained a good friend of France, refusing&mdashøgether with the Americans&mdashø take any of CFP's share of IPC's oil. The British, with tanks and planes to fuel, were less scrupulous: not until 1950 did they grant the French modest compensation.

The rapid succession of chairmen at CFP during the war reflected the instability of those times. At least Vichy allowed Mercier to depart peacefully. The same could not be said of Jules Mény who, in 1943, was taken hostage by the Nazis and deported to Dachau. He never returned. Mény's successor, Marcel Champin, died in 1945, leaving the task of determining CFP's postwar strategy to his deputy, Victor de Metz, who was to serve as chairman for 25 years.

Rapid Postwar Expansion at Home and Abroad

The nationalization drive that affected so many French companies after the war did not engulf CFP: its private shareholders were powerful and not worth alienating. More threatening for CFP in the long run was President Charles de Gaulle's creation in 1945 of the Bureau de Recherches de Pétrole (BRP), which was much later to form one of the constituent parts of Elf Aquitaine. At its creation, however, BRP was charged exclusively with searching for oil in France, its colonies, and protectorates. This mandate did not constitute an immediate threat to CFP and de Metz gave the new state-backed venture his support.

In the late 1940s and early 1950s CFP expanded rapidly both at home and abroad. The company's annual supply of oil from the Middle East increased from 806,000 tons in 1945, to 1.61 million tons in 1950, to 8.824 million tons in 1953. This was made possible partly by the collapse of the restrictive Red Line Agreement under heavy American pressure. Oil began to flow from new IPC installations at Qatar in 1949: by 1953 production had reached 3.5 million tons per year.

Another major boost to CFP's supplies resulted from the opening of a new 30-inch pipeline from Kirkouk in Iraq to the Syrian port of Banias in November 1952. The original pipelines from Kirkouk to Tripoli and Haifa were only 16 inches in diameter.

The security of these supplies depended on the continuing stability of the region and its rulers' continuing respect for the oil companies' prewar concessions. The fragility of CFP's position was perceived by Victor de Metz. He recognized that CFP needed to diversify its sources of supply.

An agreement signed with the Venezuelan oil company Pantepec in 1947 did not bear fruit in the long term. It did ensure deliveries of Venezuelan crude amounting to some 600,000 tons per year through the late 1940s; but a technical agreement between the Venezuelan firm and CFP over the development of new fields in Venezuela broke down amid acrimonious exchanges in 1950.

A purely French venture to develop the oil wealth of Algeria fared better. In 1946 the state-owned Bureau de Recherches des Pétroles had established, jointly with the French colonial government in Algeria, an oil exploration company, the Société Nationale de Recherche de Pétrole en Algérie (SN Repal). In 1947 CNP sent a geologist, Willy Bruederer, to Algeria to evaluate the region's prospects. In the early 1950s SN Repal and CFP teamed up to explore a huge region designated promising by Bruederer, some 250,000 square kilometers in size. These joint efforts yielded their reward in 1956. A huge oil field was discovered at Hassi-Messaoud in June and an equally impressive gas field at Hassi R'Mel in November.

Notwithstanding its expansion, the Compagnie Fran&ccedilse des Pétroles remained far from being a household name in France. CFP petrol stations did not cover the land, even though a large proportion of the fuel that the independent distributors sold had been refined at the plants of a CFP subsidiary.

Distribution was not a particularly profitable activity but a major oil producer without distribution facilities of its own risked being held for ransom by its distributors with the threat of losing their business. From 1946 Victor de Metz worked to remove this risk. His first step was the creation in that year of the Compagnie Fran&ccedilse de Distribution en Afrique to sell CFP's refined oil products in francophone Africa.

TOTAL Brand Debuted in 1954

The move into distribution was made possible by the unveiling of the TOTAL brand name in 1954. The distributors of oil refined by CFR were now entitled to deck out their service stations in the TOTAL colors and logo, giving them a stronger market identity. The plan was first tested in Africa and then brought to France in 1957. It worked. In 1961 refineries belonging to CFP or working on its behalf treated 12 million tons of oil. Seven million tons of these treated products went on to be distributed under the TOTAL brand name. Notwithstanding the eyecatching new livery and brand name, France's independent fuel distributors were experiencing hard times. Tougher competition from the big foreign oil companies was pushing them towards bankruptcy. One by one they sold out--usually to CFP.

CFP's original shareholders, companies that had frequently exerted a powerful influence over CFP before the war, now found themselves being swallowed up by their own creation. In 1960 CFP took over Omnium Fran&ccedils de Pétroles, acquiring valuable distribution outlets in north Africa. In 1966 CFP acquired the largest independent distributor, Desmarais Frères, with a 10 percent share of the French market to CFP.

While CFP was making strides in refining and selling its oil, the process of extracting it was becoming increasingly difficult. The model for a new relationship with the Middle Eastern governments was the 50-50 profit-sharing agreement signed by the Saudi government and the U.S. oil producers' consortium Aramco in 1950. In the same year IPC struck a similar profit-sharing deal with the Iraqi government.

The risks posed by nascent nationalism in the Middle East were made clear in 1951 when Muhammad Mussadegh came to power in Iran. He nationalized the assets of the Anglo-Iranian Oil Company--formerly the Anglo-Persian Oil Company and forerunner of British Petroleum--and an international embargo of Iranian crude failed to change his attitude. More effective was a revolt linked to the British and American intelligence services, which led to the restoration of the shah and Mussadegh's imprisonment in 1953.

A year later the oil companies and the Iranian government came to terms. An international consortium of oil companies was created, led by Anglo-Iranian with a 40 percent share. CFP took a modest six percent stake in the venture.

Increased Reliance on Algerian Oil in the 1960s

Upheavals such as the one in Iran spurred the French effort to develop oil production in its Algerian colony. However, there was another reason for heavy investment in Algeria, both from CFP and from the state-controlled BRP. This was the fact that any oil or gas discovered in Algeria would lie within the franc zone. The IPC installations in Iraq did not fall into this category and CFP had to fund its share of investment in the Iraq Petroleum Company in pounds sterling. In the late 1940s and early 1950s, when the franc was fast losing its purchasing power, this arrangement was not very satisfactory.

To help balance its currency exposures CFP endeavored during the 1950s to increase its sales abroad, notably to countries within the sterling zone. During the late 1950s a potentially greater threat emerged to CFP's historic position as cornerstone of France's energy policy. Immediately after the war the French government had endowed BRP with plentiful resources to carry out one of the tasks originally assigned by Poincaré to CFP&mdashø search for oil in France, her colonies, and protectorates. In Algeria BRP had found oil in abundance. By 1959 it was looking at ways of refining and selling it.

April 1960 saw the creation of l'Union Générale des Pétroles (UGP) to refine and distribute oil from the Hassi Messaoud field in Algeria. UGP rapidly acquired existing refineries and started to build others. It bought a refinery and a major distribution network from Caltex, a joint venture between U.S. oil majors Texaco and Standard Oil (California). UGP's expansion was supervised by Pierre Guillaumat, the first chairman of BRP immediately after the war. Within five years Guillaumat had created a French rival to CFP.

Particularly irksome to de Metz and CRP was the government's imposition of a so-called devoir national, or national obligation on oil refiners to take a certain proportion of their crude from the franc zone. In practice this meant Algeria and BRP and the other French state-controlled operations in that country. Most of CFP's oil still came from the Middle East. The reason for this discriminatory measure was that Algerian crude was more expensive than Middle Eastern crude. Demand had to be encouraged.

Just over a decade later the tables were turned. In 1971 the Algerians nationalized the assets of both CFP and Entreprise de Recherches et d'Activités Pétrolières as it had now become. The younger company was hit far harder than CFP: it relied on Algeria for 80 percent of its oil supplies. CFP took only a fifth of its production from that country.

A deal with the Algerians was finally struck in June 1971. The newly appointed chairman of CFP, René Granier de Lilliac, informed shareholders that "over a five year period, once renewable, the group is ... assured of annual production in the order of seven million tons." This was less than half the production of CFP (Algérie) before nationalization. De Lilliac took over from Victor de Metz in 1971. In his last years at the helm of CFP, de Metz had been encouraging the diversification of the group's sources of supply. In the late 1960s discoveries were made at Bekapai and Handil in Indonesia and, at the start of the 1970s, in the North Sea.

Despite the Iraqi nationalization of the assets of the Iraq Petroleum Company in 1971, in its 1971 annual report CFP was able to announce that "the rights of [the company in Iraq] will be maintained as before." On de Metz's retirement in 1971 the Compagnie Fran&ccedilse des Pétroles was one of the largest oil companies in the world. During the 1960s the company's oil production had risen at a rate 30 percent faster than global oil production.

Diversified in the Difficult 1970s

The 1970s proved tougher. The new chairman, Granier de Lilliac, had headed the Compagnie Fran&ccedilse de Raffinage for five years before taking charge of the group as a whole. In the 1970s CFP's refining activities faced the greatest difficulties. The group's refining capacity was still concentrated in France, although in 1975 sales abroad outstripped sales in France for the first time. The oil price rise of 1971 prompted by the OPEC cartel also led to a sharp reduction in world demand over the level anticipated. In 1975 CFR's refineries were working at only 67 percent capacity. At the same time exploration costs, particularly in the North Sea, were rising steeply. In France, price controls prevented CFP from passing on the full rise in crude prices to the consumer. As at Elf, diversification appeared to be the answer. In 1974 a major step was taken with the purchase of France's largest manufacturer of industrial rubber products, Hutchinson-Mapa. In the petrochemicals field, ATO Chimie was set up as a joint venture with Elf-ERAP in 1973: ten years later CFP's share was to be taken over by Elf.

CFP also moved into developing other energy sources. In uranium mining, CFP created in 1975 a joint subsidiary, Minatome, with Pechiney-Ugine-Kuhlmann. This venture was the core of today's TOTAL Compagnie Minière which in 1989 mined 711 tons of uranium in France and the United States. The same company sold 5.2 million tons of coal in 1989; again, the first steps were taken in the mid-1970s. Nevertheless, TOTAL has never diversified from its original core business as heavily as Elf.

During the 1980s unprofitable refineries in France, West Germany, and Italy were closed: the group's capacity in this area was in excess of demand. TOTAL's remaining refineries reported improved operating margins. Refining and distribution accounted for almost half the group's cash flow by 1989.

In 1985 the name by which CFP had come to be known universally was incorporated in its official title: CFP became TOTAL CFP. At the same time the Compagnie Fran&ccedilse de Raffinage and its distribution subsidiary, TOTAL CFD, merged to become CRD TOTAL France.

Serge Tchuruk Led a More Aggressive Company in the Early 1990s

At the beginning of 1990 René Granier de Lilliac stood down as chairman, and was succeeded by Serge Tchuruk, an engineer by training, who had served as manager of strategic planning for Mobil Oil Corp. in the 1970s, and who had managed in the 1980s to turn around two other French firms--the chemical giant Rhone Poulenc and French state chemicals group Orkem&mdash′ior to being hired by TOTAL. One of Tchuruk's first tasks was to incorporate part of Orkem into TOTAL's chemical operations. Under a restructuring of the industry superintended by the French government, TOTAL acquired Orkem's specialty chemicals businesses, producing inks, adhesives, paints, and resins.

Tchuruk also moved quickly to transform TOTAL--which had by the early 1990s ceded its position as France's largest oil company to Elf Aquitaine--from a bureaucratic, complexly organized, rather sleepy firm into a sleeker, more modern, and more aggressive company. Two hundred subsidiaries were abolished, saving hundreds of millions of francs in expenses, and were replaced by a mere six profit centers; one-seventh of TOTAL's service stations network was closed in 1991; and about 6,500 jobs were eliminated. At the same time, Tchuruk aggressively expanded the company's marketing operations into new, potentially more lucrative markets, with TOTAL purchasing interests in service station chains in Spain, Portugal, Czechoslovakia, Hungary, and Turkey.

On the production side, Tchuruk sought to lessen TOTAL's reliance on the unstable Middle East, aiming to increase oil and gas production outside the Middle East by 50 percent by 1995. In 1991 a joint venture--40 percent owned by TOTAL--with British Petroleum and Triton Energy discovered an oil field at Cusiana in Colombia, while TOTAL on its own discovered a significant gas field at Peciko in Indonesia. In 1993 production began at a gas field in Thailand at Bongkot. By 1995 Tchuruk's emphasis on beefing up the company's gas business had made TOTAL the world's third largest gas producer, trailing only Royal Dutch/Shell and Mobil.

In June 1991 the company changed its name to TOTAL S.A. Soon thereafter, TOTAL began trading on the New York Stock Exchange for the first time. The following year, Tchuruk convinced the French government to reduce its direct share holding in the company to 5.4 percent. This development increased TOTAL's independence and its ability to act quickly and aggressively.

Thierry Desmarest Headed a Controversial Firm in the Later 1990s

In 1995 Tchuruk left TOTAL to attempt yet another turnaround, this time at Alcatel Alsthom. Replacing him was 15-year company veteran Thierry Desmarest, who almost immediately closed a US$610 million deal to develop two offshore oil fields in Iran; TOTAL thus became the first foreign oil company allowed back in Iran since the overthrow of the Shah in 1979. These Iranian fields were the very ones that Conoco Inc. had been forced to abandon under pressure from the U.S. government. TOTAL already had stakes in two oil fields in Libya, another country subject to U.S. sanctions. The company was also a partner in a consortium formed in 1992 to build a US$1.2 billion offshore gas pipeline in Burma (Myanmar) to carry gas from the Gulf of Martaban to Thailand. Despite Burma's being subject to sanctions starting in the mid-1990s because of its repressive military regime, TOTAL stuck with the project. Through its willingness to operate in such controversial countries, TOTAL had fewer competitors for its projects and was able to make better deals; in part, this led the company's exploration and development costs to be among the lowest in the industry. In turn, lower exploration costs contributed to steadily increasing profits; net income rose from FFr2.85 billion (US$600 million) in 1992 to FFr7.61 billion (US$1.26 billion) in 1997.

In 1996 the French state divested another four percent of its TOTAL stake, leaving its stake at only 0.97 percent. The following year, the company entered into another controversial project when it announced in September that it would invest $2 billion to develop an Iranian gas field. Prior to signing the deal, however, Desmarest got advance backing from the French government and the European Union, lessening the possibility that U.S.-sponsored sanctions would threaten it. Furthermore, TOTAL had just days before signing this Iranian deal completed its sale of TOTAL Petroleum (North America) Ltd.--its North American refining and marketing arm&mdashø Ultramar Diamond Shamrock Corp. for an approximate eight percent stake in Ultramar, with the additional proviso that Ultramar would assume around $435 million in TOTAL Petroleum debt. Desmarest told Business Week that "having only a small part of our activities in the U.S. leaves us more comfortable with the U.S. reaction [to TOTAL's Iranian venture]."

In November 1997 the company continued to beef up its upstream activities with the formation of a consortium 40 percent owned by TOTAL to extract and develop a 175,000-barrels-a-day find in Venezuela. The following month it paid £86 million for the adhesives and textile coatings division of BTP, a U.K.-based specialty chemicals manufacturer.

Despite quite a large exposure to the Asian financial crisis that arose in 1997, TOTAL's results for that year were extremely healthy: a 7.9 percent increase in sales to FFr191.09 billion (US$31.75 billion) and a 35 percent increase in profits to FFr7.61 billion (US$1.26 billion). TOTAL's aggressive approach in the 1990s had turned the company into one of the most profitable in the industry as well as one of the most fearless in terms of controversial dealmaking. As the century was coming to a close, Desmarest announced that TOTAL would aim to make more deals with Iran; meanwhile, the company had already agreed to develop the huge Nahr Umar oil field in Iraq, although in that case TOTAL had to wait until U.N. sanctions were lifted. Clearly, the era of TOTAL as (profitable) maverick was only beginning.

Principal Subsidiaries: Bostik AB (Sweden); Bostik S.A.; CFP Algérie; Cray Valley S.A.; Finalens (90.4%); Hutchinson (62.1%); Norsokappa; Omnium Insurance Reinsurance Cy (99.9%); Omnium de Participations S.A. (99.9%); Polichem S.A.; Société Financière d'Auteuil (99.9%); TOTAL America, Inc.; TOTAL Australia Ltd.; TOTAL Chimie; TOTAL Deutschland GmbH; TOTAL Empresa Portuguesa; TOTAL España; TOTAL Hungaria (91.5%); TOTAL Inchiostri S.p.A.; TOTAL International Ltd.; TOTAL Oil Holdings Ltd.; TOTAL Outre Mer; TOTAL Raffinage Distribution S.A. (98.9%); TOTAL Transport Maritime; Tüpgaz (99.8%).

Principal Divisions: Exploration & Production; Middle East; Gas, Electricity & Coal; Trading & Shipping; Refining & Marketing; Chemicals Hutchinson.