Total set to raise cost savings target after Maersk Oil deal

Total has offered to buy the oil and gas business of Denmark’s A.P. Moller Maersk in a $7.45 billion deal. (Reuters)
Updated 22 August 2017
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Total set to raise cost savings target after Maersk Oil deal

PARIS: Total is set to increase its target for $4 billion of cost savings by 2018 in the light of its planned acquisition of Maersk Oil, Chief Executive Patrick Pouyanne said on Monday.
Overlap between the UK operations of the two companies means some jobs could be at risk there, he added.
Total has offered to buy the oil and gas business of Denmark’s A.P. Moller Maersk in a $7.45 billion deal which the French energy major said would strengthen its operations in the North Sea and boost earnings and cash flow.
Total said the deal was expected to generate operational, commercial and financial synergies of more than $400 million per year, in particular by combining assets in the North Sea.
“At least $200 million are costs synergies, so we target cutting costs by $200 million out of this combination on top of what Total has already done, and it will be a part of our new target for cost savings,” Pouyanne told journalists.
Total previously planned to cut costs by $4 billion by the end of 2018, adjusting to lower oil prices.
“By mid September we will revise this target, we will upgrade the target,” he said. The company will hold an investor day in September.
Pouyanne said the North Sea was one of the areas where the company would have to go further in cost savings to remain competitive, and the Maersk Oil deal offers it the opportunity to do so.
Maersk lost a long-standing agreement to operate Al-Shaheen in Qatar to Total last year, but is according to media reports in talks with Iran to develop the oil layer of the South Pars field, which is an extension of the Qatari field.
Total last month signed a major deal with Iran to develop the gas part of South Pars.
Total also said it was investing $3.5 billion over five years in Qatar's offshore Al Shaheen oilfield.


US-China trade war to weigh on South Korean economy

Updated 18 July 2018
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US-China trade war to weigh on South Korean economy

  • The South Korean economy is expected to grow 2.9 percent this year, lower than an earlier estimate of three percent
  • The International Monetary Fund said this week the growing trade confrontation is the ‘greatest near-term threat to global growth’

SEOUL: South Korea’s finance minister warned that an all-out trade war between the US and China would have grim implications for the country, as he lowered this year’s growth outlook Wednesday.
The world’s 11th largest economy is expected to grow 2.9 percent this year, lower than an earlier estimate of three percent, Kim Dong-yeon said, citing slowing demand at home and abroad as well as rising unemployment.
The latest estimate is also lower than last year’s figures, when the export-reliant economy expanded 3.1 percent, and comes as the South’s top two trading partners China and the US engage in a bitter spat that has seen them impose hefty tariffs on billions of dollars in goods.
“The economic situation down the road does not seem to be bright,” Kim told reporters.
“The situation may get worse if anxiety in the international financial markets spreads due to the US-China trade dispute... and market and corporate sentiment does not improve,” he said.
Overseas shipments account for more than half of the South’s economy, with more than a quarter of exports shipped to China and about 12 percent to the US.
Kim vowed to “closely monitor international trade situations including the US-China trade row” and announced measures to encourage job creation and spur domestic spending.
US President Donald Trump has taken a confrontational “America First” stance on trade policy, imposing steep tariffs on steel and aluminum, which angered allies and prompted swift retaliation, as well as 25 percent duties on $34 billion of Chinese goods, with more on the way.
China has matched US tariffs dollar-for-dollar and threatened to take further measures, while US exports face retaliatory border taxes from Canada, Mexico and the European Union.
The International Monetary Fund said this week the growing trade confrontation is the “greatest near-term threat to global growth” and in the worst case could cut a half point off world GDP.