Total CEO: Underlying Oil Price Trend Is Upward

The chief executive officer of French oil company Total SA (TOT) said oil prices are trending upward while refining margins are weak, and also said the company is widening

the field of possible buyers for its Lindsey refinery in the U.K.
"The trend at the moment is for prices to rise as fundamentals point to more energy demand," Christophe de Margerie said on a panel at the Rencontres Economiques d'Aix-en-Provence conference here in the south of France.
Without speculation, oil prices would still be rising, in part due to geopolitical concerns and demand, he added.
"Yes, prices are going up, and you shouldn't expect them to come back down in the long term," de Margerie told reporters on the sidelines of the conference. "On an underlying basis they will continue to rise, the price isn't just up to us as a oil company."
He noted that the price of oil has even risen to around $118 a barrel in spite of the International Energy Agency's decision in June to release 60 million barrels of oil from emergency stocks to alleviate problems caused by the shutdown of Libyan crude exports due to the civil war. Prior to the IEA's move, oil was around $114 a barrel, de Margerie said.
He also said refining margins are "very weak" at the moment and that the sale of parts of Total's refining business is taking longer than expected. Refining margins represent the difference between the price of a barrel of oil and the price of the products, such as gasoline and jet fuel, that can be produced from it.
De Margerie also said Total is no longer in exclusive talks for the sale of its Lindsey Oil Refinery in the U.K.'s North Killingholme, though a deal is still imminent.
"We're no longer in exclusive negotiations, we've changed the perimeters of the talks," De Margerie said. "We've been close to completing a sale for six months; we're still close."
"We've opened up the discussion," he said, without naming the companies involved or how many are interested.
He also stopped short of confirming the group -- France's largest company by market cap -- target of EUR10 billion of asset sales in 2011.
"There's a moment where the situation becomes more clear," De Margerie said. "We haven't got a policy of saying what we'll sell and how much we'll sell it for, so I'm hesitant to give a precise figure to the market."
On asset sales more generally, the Total CEO said the group is "flexible" in its approach to acquisitions.
"If opportunities present themselves, we have to be flexible," de Margerie said. "We can sell assets that are nearing the end of their useful life for us, or don't fit into our overall strategy. Why do we need to own a pipe? What we do need are the rights to use it."
Overall, he stressed the importance of getting the long-term strategy right and "showing our investments are appropriate" rather than just spinning off assets.
"We know how to sell things off, we don't want to just sell for the sake of selling," he said. "Investment is the key to stability."
Source: Dow Jones