RISK FACTORS
Other risks
4
The EPSA was revised, effective December 21, 2004, and provided
that the parties (the Government of Sudan and the consortium
partners) would mutually agree upon a resumption date when the
petroleum operations could be undertaken physically in the contract
area. Such resumption date would mark the starting point of the
Group’s work obligations as foreseen in the contract. A joint decision
on the resumption date has not occurred yet.
Regulations concerning Iran and Sudan
In September 2006, the U.S. legislation implementing sanctions
against Iran and Libya (Iran and Libya Sanction Act, referred to as
“
ILSA”), was amended and extended until December 2011. Pursuant
to this statute, which now concerns only Iran (Iran Sanctions Act,
referred to as “ISA”), the President of the United States is authorized
to initiate an investigation into the possible imposition of sanctions
(
from a list that includes denial of financing by the U.S. Export-Import
If TOTAL were to resume its activities in southern Sudan, it would do
so in compliance with applicable national, European and international
laws and regulations, as well as with the Group’s Code of Conduct
and Ethics Charter. Within the Group’s scope of operations and
authority, it is committed to upholding human rights and fundamental
freedoms, including social, economic and cultural rights, and the
rights and interests of local residents, minorities and any other
vulnerable groups. In particular, the Group will study the situation with
non-governmental organizations and stakeholders involved in
southern Sudan and conduct socio-economic programs adapted to
the needs of the local population. Significant programs were launched
at the end of 2008 in the fields of access to potable water, social
infrastructures and schools with two international non-governmental
organizations present in the region.
Bank and limitations on the amount of loans or credits available from
U.S. financial institutions) against persons found, in particular, to have
knowingly made investments of $20 million or more in any 12-month
period in the petroleum sector in Iran. In May 1998, the U.S.
government waived the application of sanctions for TOTAL’s
investment in the South Pars gas field. This waiver, which has not
been modified since it was granted, does not address TOTAL’s other
activities in Iran, although TOTAL has not been notified of any related
sanctions.
In November 1996, the Council of the European Union adopted
regulations which prohibit TOTAL from complying with any
requirement or prohibition based on or resulting directly or indirectly
from certain enumerated legislation, including ILSA. It also prohibits
TOTAL from extending its waiver for South Pars to other activities.
Certain U.S. states have adopted legislation requiring state pension
funds to divest themselves of investments in any company with active
business operations in Iran or Sudan. On December 31, 2007, the U.S.
Congress adopted the Sudan Accountability and Divestment Act,
which supports these state legislative initiatives. If TOTAL’s activities
in Iran or Sudan were determined to fall within the prohibited scope of
these laws, and TOTAL were to not qualify for exemptions provided by
such laws, certain U.S. state pension funds holding interests in TOTAL
may be required to sell their interests. If significant, such sales could
have an adverse effect on TOTAL’s share price.
In each of the years since the passage of ILSA (now ISA) until 2007,
TOTAL made investments in Iran (excluding South Pars) in excess of
$
20 million. TOTAL’s activities in Iran are currently limited mainly to
the implementation of two buyback contracts signed between 1995
and 1999 for two permits on which the Group is no longer the
operator. As a result, TOTAL’s involvement consists essentially in
being reimbursed for its past investments. In 2008, TOTAL’s
production in Iran was 8.8 kboe/d, approximately 0.4% of the Group’s
worldwide production. TOTAL does not believe that its activities in
Iran have a material impact on the Group’s results.
In the future, TOTAL may decide to invest amounts in excess of
Furthermore, the United States currently imposes economic
sanctions, which are administrated by the U.S. Treasury Department’s
Office of Foreign Assets Control and which apply to U.S. persons,
with the objective of denying certain countries, including Iran, Syria
and Sudan, the ability to support international terrorism and,
additionally in the case of Iran and Syria, to pursue weapons of mass
destruction and missile programs. TOTAL does not believe that these
sanctions are applicable to any of its activities in these countries.
$
20 million per year in the country. TOTAL cannot predict
interpretations of or the implementation policy of the U.S. government
under ISA with respect to its possible future activities in Iran. It is
possible that the United States may determine that these or other
activities constitute activity prohibited by ISA and will subject TOTAL
to sanctions. TOTAL does not believe that enforcement of ISA,
including the imposition of the maximum sanctions under the current
applicable law and regulations would have a material negative effect
on its results of operations or financial condition.
France and the European Union have adopted measures, based on
United Nations Security Council resolutions, that restrict the
movement of certain individuals and goods to or from Iran as well as
certain financial transactions with Iran, in each case when such
individuals, goods or transactions are related to nuclear proliferation
and weapons activities or likely to contribute to their development. As
currently applicable, the Group believes that these measures do not
cover TOTAL’s activities and projects in this country.
Nigeria
Security concerns in the Niger Delta region led the Shell Petroleum
Development Company (SPDC, of which TOTAL owns 10%) to
progressively stop production at certain facilities, which were targeted
in attacks, starting in the first quarter 2006. Repair work on facilities in
the western zone of the Niger Delta region continued in 2008, allowing
production to partially resume. The SPDC joint venture’s gas and
condensates production was affected by the shutdown of the Soku
treatment plant which had to be repaired after vandalism on the
export pipelines late in 2008. NLNG export capacity also decreased as
a result of this shutdown. The offshore Bonga field on the OML 118
permit, operated by SNEPCO in which the Group holds a 12.5%
interest, was attacked in June 2008. This attack did not have a
significant impact on the Group’s production in the country.
TOTAL has no active business in Sudan. TOTAL has no oil or gas
production in Sudan and, to date, has not made any significant
investments or industrial investments there.
TOTAL holds a 32.5% interest in Block B in southern Sudan through a
1
980 Exploration and Production Sharing Agreement (EPSA).
Operations were voluntarily suspended in 1985 because of escalating
security concerns, but the company maintained its exploration rights.
8
0 / TOTAL – Registration Document 2008
