Total aims for new fields in North Sea

By Benjamin Mallet

ABERDEEN (Reuters) - French oil major Total (TOTF.PA) aims to shave a fifth off the cost base of its North Sea operations this year while looking to prolong the life of existing wells there and open new ones.

The firm's 2009 exploration and production budget in what is a declining oil and gas reserve area is 1.2 billion pounds, said Roland Festor, Total's head of E&P in Britain.

At around $30 per barrel on average, extraction costs in the North Sea are relative high, due mainly to a lack of competition between service providers and high pay packages.

"We need to cut operating costs by some 20 percent," Festor said, also citing the value of tax breaks in helping the company manage the rising costs of replenishing its reserves.

Total's fields in the British North Sea, where it has been an operator since 1955, produced 213,000 barrels per day in 2008, two thirds of it gas. The figure equates to around 9 percent of the group's total output.

Only 10 wells are scheduled to be opened across the region's fields in 2009, against 108 in 2008, Festor added.

"(So) if we stopped investing, the decline in production would be such that in several years we would have a 2008 situation (of rapidly escalating prices) all over again, even worse," he said.

Some 82 percent of Total's North Sea output comes from the Alwyn and Elgin-Franklin fields, which make up the region's biggest proven reserves and offer a snapshot of the technological and financial challenges facing the oil industry.