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Sat 12 Dec 2009 09:49 PM

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Total Energie undercut, loses out on Iraqi oilfields

French energy giant disappointed to lose out on major oilfields during Iraqi oil auction.

Total Energie undercut, loses out on Iraqi oilfields
LOST OPPORTUNITY: Totals CEO said that he was disappointed to lose an opportunity to invest in Iraqi oilfields. (Getty Images)

France's Total was disappointed to lose out in Iraq's oil auction this week but was unwilling to bid aggressively to win deals on some of the world's largest fields, its chief executive said on Saturday.

In an interview with Reuters, Christophe de Margerie said: "What we have lost is an opportunity to invest, and for this I'm unhappy. But I was not ready to pay the price."

Total was a frontrunner to win the supergiant Majnoon field at the two-day auction of some of Iraq's biggest oil assets. It negotiated for the field under the regime of ousted dictator Saddam Hussein.

But Royal Dutch Shell and Malaysia's state-run Petronas undercut Total to walk away with the prize.

On Saturday, Total bid for another supergiant, the West Qurna Phase Two project, but lost out to a partnership of Russia's Lukoil and Norway's Statoil.

Lukoil and Statoil will struggle to cover their costs at the $1.15 per barrel fee they bid, de Margerie said.

He added: "At $1.15, you cannot have a sustainable development policy, it doesn't cover your costs in the long term as an investor. It's not our strategy; our strategy is not to bid at those levels."

Total did not come away empty-handed from the auction, a rare opportunity to gain access to cheap Middle East reserves.

It was part of a consortium led by China's CNPC that won a deal at the giant Halfaya field. As a minority shareholder, with 25 percent of the consortium, Total would not operate the field.

Some of Total's fiercest competitors such as BP, Exxon Mobil and Shell have all won deals as lead partners, or operators, of fields.

The French energy giant still hoped to win future deals in Iraq, he said.

"Iraq is still an important country where we want to invest, there are different fields," he added."I'm still thinking we have not turned the page on Iraq.

"The Middle East teaches you how to be patient."


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