Total in 2006

CONTENTS u 1

KEY FIGURES 2006 u 2

CHAIRMAN’S MESSAGE u 6

QUESTIONS FOR CHRISTOPHE DE MARGERIE u 8

CORPORATE GOVERNANCE* u 10— Board of Directors— Directors’ Charter— Board Meetings— Audit Committee— Nominating & Compensation Committee— The Executive Committee

and the Management Committee— Organizational Chart

COMPANY ACTIVITIES* u 20— Highlights

UPSTREAM u 26— Exploration & Production— Gas & Power

DOWNSTREAM u 44— Refining & Marketing— Trading & Shipping

CHEMICALS u 52— Base Chemicals — Specialties

RESEARCH AND DEVELOPMENT u 57— Research and development costs

CORPORATE SOCIALRESPONSIBILITY** u 58— Ethics— Industrial safety— Human resources— Local development— Environment — The future of energy

CORPORATE FOUNDATION u 68

CORPORATE PHILANTHROPY u 70

SHAREHOLDER NOTEBOOK* u 72— Share performance— Strengthening relationships with individual

shareholders— Relationships with institutional shareholders

and financial analysts

FINANCIAL INFORMATION* u 82— Statutory auditor’s report on the consolidated

financial statements— Consolidated statement of income— Consolidated balance sheet— Consolidated financial information for the last five years

CONTENTS

* For further information, please consult TOTAL’s “Registration Document 2006”, which is available in print or by accessing in the Group’s web sitewww.total.com

** Further information on TOTAL’s 2006 social responsability achievements and policy can be obtainedby consulting or downloading the Corporate SocialResponsability Report, “Sharing our energies”.www.total.com/csr

KEY FIGURES

(a) Excluding special items, inventory valuation effectand TOTAL’s equity share of amortization of intangibleassets related to the Sanofi-Aventis merger.

(b) Based on the weighted-average number of com-mon shares outstanding during the period.(c) 2006 dividend subject to approval by the May 11,2007 shareholders’ meeting.

(d) 2004 and 2005 amounts are restated as per thefour-for-one stock split that took place on May 18,2006.

(a) Including share of CEPSA. (b) Including Trading activities and share of CEPSA.

I SELECTED FINANCIAL INFORMATIONConsolidated data in M€,except earnings per share, dividends, number of shares and percentages.

2 o TOTAL IN 2006

2006 2005 2004

Sales 153,802 137,607 116,842Operating income 24,130 24,169 17,026Adjusted operating income from business segments (a) 25,166 23,468 17,039Adjusted net operating income from business segments (a) 12,377 11,912 9,126Adjusted net income (Group share) (a) 12,585 12,003 9,131Fully diluted adjusted earnings per share (euros) (a)(b)(d) 5.44 5.08 3.76Dividend per share (euros) (c)(d) 1.87 1.62 1.35Net-debt-to-equity (as of December 31) 34% 32% 31%Return on Average Capital Employed (ROACE) 26% 29% 26%Return on equity 33% 35% 33%Cash flow from operating activities 16,061 14,669 14,662Expenditures 11,852 11,195 8,904Divestitures at selling price 2,278 1,088 1,192

I OPERATING AND MARKET DATA

2006 2005 2004

Brent price ($/b) 65.1 54.5 38.3(€/$) 1.26 1.24 1.24TRCV European refining margins ($/t) 28.9 41.6 32.8

Hydrocarbon production (kboe/d) 2,356 2,489 2,585Liquids production (kb/d) 1,506 1,621 1,695Gas production (Mcf/d) 4,674 4,780 4,894Refinery throughput (kb/d) (a) 2,454 2,410 2,496Refined product sales (kb/d) (b) 3,786 3,792 3,771

I SALES

153,802 M €

I ADJUSTED NET INCOME(GROUP SHARE)

12,585 M €

I ADJUSTED NET OPERATING INCOMEFROM BUSINESS SEGMENTS

12,377 M €

I ADJUSTED FULLY-DILUTEDEARNINGS PER SHARE

5.44 €

I GROSS EXPENDITURES

11,852 M €

I DIVIDEND PER SHARE

1.87 €*

KEY FIGURES u 3

2004

116,842

2005

137,607

2006

153,802

2004

9,126

2005

11,912

2006

12,377

2004

3.76

2005

5.08

2006

5.44

2004

9,131

2005

12,003

2006

12,585

� Upstream � Downstream � Chemicals

2004

8,904

2005

11,195

2006

11,852

2004

1.35

2005

1.62

2006

1.87*

� Upstream � Downstream � Chemicals � Corporate

* Subject to approval by the shareholders’ meeting on May 11, 2007.

4 o TOTAL IN 2006

Upstream

I HYDROCARBON PRODUCTION

2,356 kboe/d

I LIQUIDS AND GAS RESERVES

11,120 Mboe

2004

2,585

2005

2,489

2006

2,356

2004

11,148

2005

11,106

2006

11,120

� Europe � Africa � North America

� Asia � Rest of world � Liquids � Gas

Downstream

I REFINED PRODUCT SALESINCLUDING TRADING

3,786 kb/d

I REFINING CAPACITYAT YEAR-END

2,700 kb/d

Chemicals

I 2006 NON-GROUPSALES: 19 B€€

2004

3,761

2005

3,792

2006

3,786

2004

2,692

2005

2,708

2006

2,700

� Europe � Rest of world � Europe � Rest of world

37%Specialties 63%

BaseChemicals

I 2006 ADJUSTED NETOPERATING INCOME: 0.88 B€€

44%Specialties 56%

BaseChemicals

KEY FIGURES u 5

I SHAREHOLDERBASE*

10%Individual shareholders

86%Institutionalshareholders

4%Group’s

employees

I SHAREHOLDER BASEBY REGION*

23%Rest of Europe

26%North

America34%France

2%Rest of world

15%United Kingdom

I HEADCOUNTBY REGION*

32%Rest of

world 40%France

28%Rest of Europe

I HEADCOUNT BYBUSINESS SEGMENT*

47%Chemicals

1%Corporate 16%

Upstream

36%Downstream

* Consolidated subsidiaries’ employees as of December 31, 2006: 95,070. * Consolidated subsidiaries’ employees as of December 31, 2006: 95,070.

Abbreviationsb: barrel

cf: cubic feet

/d: per day

/y: per year

€: euro

$ and/or dollar: US dollar

t: metric ton

boe: barrel of oil equivalent

kboe/d: thousand boe/d

kb/d: thousand barrel/d

Btu: British thermal unit

LNG: liquefied natural gas

M: million

B: billion

MW: megawatt

MWp: megawatt peak

TWh: terawatt hour

TRCV: Topping Reforming Cracking Visbreaking. Refining margin indicator after variable costs of a theoretical average refinery located in Rotterdam whichprocesses a variety of crude oil representing the averagesupply in the area to provide main products quoted in this same area.

IFRS: International Financial Reporting Standards

API: American Petroleum Institute

Conversion table

1 boe = 1 barrel of crude oil = approx. 5,500 cf of gas in 2006

1 b/d = approx. 50 t/y

1 t = approx. 7.5 b (for a gravity of 37° API)

1 Bm3/y = approx. 0.1 Bcf/d

1 m3 = approx. 35.3 cf

1 t of LNG = approx. 8.9 boe = approx. 48 Mcf of gas

1 Mt/y of LNG = approx. 133 Mcf/d

Definitions

The terms “TOTAL” and “Group” as used in this present document refer toTOTAL S.A. collectively with all of its direct and indirect consolidated subsidiarieslocated in, or outside of France.

The terms “Company” and “issuer” as used in this document refer only toTOTAL S.A., the parent company of the Group.

© TOTAL S.A. April 2007

* Estimates as of December 31, 2006, excluding treasury shares. * Estimates as of December 31, 2006, excluding treasury shares.

CHAIRMAN’S MESSAGE6 o TOTAL IN 2006

During 2006, the oil and gas industry once again enjoyed generallyfavorable conditions. TOTAL’s adjusted net earnings per share indollar terms rose by 8%, benefiting from a favorable oil marketenvironment and in spite of pressure on costs and a 5% fall inproduction. Return on capital employed by the Group’s businesssegments came to 29%, reflecting the quality of our portfolio ofactivities and the discipline applied to investment.During the year, the Group made investments totaling $14 billion(excluding acquisitions), of which 75% was in the Upstreamsegment. The successful production start-up of the Dalia field inAngola at the end of the year confirmed that we can now lookforward to a renewed period of sustained oil and gas productiongrowth. At the same time, our exploration successes and our newpartnerships in Nigeria’s Brass LNG and Australia’s Ichthys LNGprojects strengthen TOTAL’s potential for long-term growth.

The return to our shareholders, in terms of both dividends andshare buybacks, was equivalent to nearly 6.5% of the Group’sstock-market capitalization at the end of 2005. The Arkema spin-off added a further 1.5% to this return.

Present in 130 countries, TOTAL pursues a policy of socialresponsibility and sustainable development, the guidelines forwhich are set out in a Code of Conduct that is now published insome 20 languages. We report on our achievements in this area toour various stakeholders, not just in an annual Corporate SocialResponsibility Report but also whenever we have direct contactwith civil society representatives or with our shareholders.

In the Upstream segment, TOTAL is pursuing a strategy ofprofitable internal growth that should allow us to increase ourproduction of hydrocarbons by more than 5% per year on averageover the period 2006-2010. The increase in production should beparticularly strong in our LNG sector, which is expected to postaverage yearly growth of 13%. Looking beyond 2010, TOTAL’sportfolio of projects has good visibility, largely thanks to ournumerous exploration successes in the last few years as well asmajor new projects in LNG and heavy crude.

During 2006, TOTAL’s exploration teams discovered a record 1.2 billion barrels, and we must now bring these new discoveries into production as quickly as possible. They are mostly located in zones – particularly the North Sea, Angola and Nigeria – wherethe Group already has a strong presence. Our geographicdiversification of activities is one of the Group’s strong points,allowing us to balance risks and opportunities.At the same time, we have begun to apply this same policy of diversification in the area of human resources, aiming tointernationalize harmoniously and sustainably all of TOTAL’s mainmanagerial levels.

2006 also saw major advances achieved by our gas businesses,with production start-ups (the commissioning of liquefaction trains4 and 5 at the Bonny plant in Nigeria), progress on a number of other major projects (Yemen LNG and Snøvhit) and newproduction records (in Indonesia Group production reached 2.6 billion cubic feet per day). The Groups’ portfolio was also

CHAIRMAN’S MESSAGE u 7

bolstered by the addition of several major projects (Brass LNG inNigeria, Qatargas II, Ichthys in Australia). These projectsstrengthen our potential to increase production over the long termand improve the geographic diversity of our portfolio.

In the Downstream segment, the Group is moving to enhance thepositioning of its refining assets via new projects involvingconversion and sweetening units as well as ongoing modernizationprograms to make our refineries even more reliable. At the end of 2006 we brought onstream a new distillate hydro-cracker at the Normandy refinery. In North America, our refiningteams continued to study the possibilities for supporting andsynergizing with the Group’s Upstream activities for valorizingheavy crudes in Canada. In the Asia/Middle East zone the Jubailrefinery project was initiated in synergy with the Petrochemicalsactivities.

On the Marketing side, TOTAL’s up-market brand positioning inFrance’s motor-fuels market is proving successful and ourdistribution networks in Germany and the United Kingdom haveboth been restructured. In Africa, following a series of acquisitionsin 2005, we now have a well-diversified portfolio of assets and ourmarket leadership is solidly established. In Asia, TOTAL’s networksin Pakistan, Cambodia and the Philippines are expanding and weare strengthening our presence in China via two joint ventures.

In Petrochemicals, TOTAL will continue to increase its productionof polymers, particularly in Asia and the Middle East, while alsomoving to make our activities in mature markets more competitive.Our Specialties segment also continues to grow, largely thanks toacquisitions in businesses such as adhesives and electroplatingand also Hutchinson.

One of the key issues in today’s energy industry is research andtechnological innovation. TOTAL is working to improve theefficiency and to reduce the cost of renewable energy systems, we are developing bio-energies and also looking at ways to deriveenergy from biomass. In a move to help curb global warming, the Group has launched a project involving capture and geologicalstorage of CO2 at our Lacq site in southern France. This pilotproject is a world first on such a scale and the results will be ofgreat interest to all industrial sectors that consume large quantitiesof fossil fuels: refineries, petrochemicals plants, thermal powerplants, cement plants, clean-coal developments, etc.

Between 2002 and 2007, we will have doubled the Group’s annualcapital investments, which are expected to come to $16 billion in 2007, of which 75% will be in the Upstream segment.

Since the merger that created TOTAL in 2006, the dividend paid to our shareholders, in dollar terms, has increased by an average of20% per year, which is stronger growth than any of the Group’s mainrivals. The Board of Directors has proposed to increase by 15% the dividend payable for 2006, showing how confident the Group is that it can pursue successfully its strategy of profitable growth.

TOTAL is determined to remain one of the most dynamic andsuccessful energy groups in the world today:• by paying careful attention to safety and environmental protection,

which allows us to improve the reliability of our industrial plant;• by pursuing an investment strategy aimed at profitable organic

growth;• by leveraging our top expertise in high-growth sectors (deep

offshore, LNG, heavy crudes);• by maintaining good geographic diversity of both reserves and

production; and • by implementing a wide-ranging human resources program with

the emphasis on diversity at the managerial level.

In today’s volatile business environment, the most important thingfor TOTAL is to ensure continuity and coherence in its activities.These two elements must also underpin all our efforts to build a secure future. I decided recently to initiate the transfer ofoperational power in the Group by proposing to separate thefunctions of Chairman and Chief Executive Officer. The Board of Directors agreed to appoint Christophe de Margerie as CEO ofTOTAL with effect from February 14, 2007. During the many yearswe have worked together at TOTAL, he has amply demonstratedthat he possesses the qualities necessary to lead the Group to long-term success.

As Chairman of the Board of Directors, I will continue to ensure thatthe rules of corporate governance are observed at all times and I willcontribute to strategic thinking on the future directions for the Group,devoting all my experience to ensuring TOTAL’s successful growth.

In view of the quality and commitment of the Group’s employees,our broad portfolio of projects, our healthy financial situation andthe full backing of our shareholders, I have every confidence thatTOTAL has the ability to maintain for many years to come itsleading position as one of the largest and most profitable energygroups in the world.

Thierry DesmarestChairman of the Board of Directors

Christophe de Margerie Thierry Desmarest

8 o TOTAL IN 2006

The energy environment has completelychanged in the last few years. TOTAL is posting excellent results, but will this beenough to maintain the Group’s position asa leader over the long term?We are certainly seeing some major changes in the oil and gasenvironment, with the emergence of new players, crude pricesgoing up or staying high, energy markets being deregulated andaccess to resources becoming more difficult in some countries. Our Group does business in 130 countries throughout the world.We are active in the OECD zone and particularly strong in non-OECD countries. It gives us a real competitive edge to be presentboth where the energy resources are found and where futuredemand for them will be stronger.Our position as a leader is due to the good geographic balance ofour activities and the diversity of our project portfolio, but also toour sound financial situation and to our ability to resist today’senvironment while seizing new opportunities and growing stronger.Today, we invest more than $1 billion every month, targetingRefining, Petrochemicals and above all the Upstream segment. Forthe period 2004-2006, our renewal rate for proved plus probablereserves (so-called «2P» reserves) stands at nearly 200%. Ourstronger reserves portfolio is largely the result of our explorationefforts, but we have also been negotiating access to existingreserves that can be valorized over the long term. New gasprojects in Qatar, Yemen and heavy oil projects in Canada havemade significant contributions here over the last three years.Between 2006 and 2010, our target is to increase our productionby more than 5% per year on average. In order to maintain its ranking as one of the leading international oil companies, the Group is building a long-term position. We are currentlyworking on projects that will bear fruit in 2015-2020. Success willdepend on our willingness to listen to our partners’ concerns, ourcapacity for adaptation and inventiveness and above all our abilityto manage risks and uncertainties. We will need all of these skills ifwe are to remain among the leaders.

How can TOTAL hope to devise a long-termstrategy when the commercial, environmentaland technical contexts are changing all the time?For many years we have been forging win-win partnerships withhydrocarbon-producing countries and today we are working tostrengthen them. With the rise in oil and gas prices, producingcountries have become aware of the value of their untappedreserves and just how necessary it is to optimize management ofthose reserves if they are to achieve long-term economicdevelopment. This approach is being given more or less emphasisdepending on each country’s needs, the political forces in play andthe difficulties involved in accessing and valorizing the reserves inplace. It is not enough for TOTAL to offer to develop a country’sreserves more economically, arguing that we possess theappropriate technology. With crude prices at about $60 a barrel,national companies have the means to benefit from all the bestsolutions offered by research and development (R&D) teams.

Given this situation, what we have to do is show producingcountries that our know-how and technology can help them gobeyond this to valorize the oil and gas deposits that were longconsidered unproducible. Mind you, our proposals cannot bebased solely on our ability to produce reserves that are difficult to access or at the frontier of current technological expertise; the experience amassed by TOTAL is certainly an asset, but it isnot enough on its own to convince producing countries to formpartnerships with us. We also have to persuade them that we canhelp to develop their resources in a sustainable manner.In other words, I would say that a group like ours must contributeto the socio-economic development of producing countries whilestill ensuring that our business there is profitable. Two importantelements here are education and vocational training. It is essentialthat we help build up know-how in the countries where we dobusiness. We must continue to recruit local workers, ensure thatthey have skilled local technicians and engineers to supervisethem, and insist that all our employees comply with the strictstandards of behavior that are part of our ethics and set forth in ourCode of Conduct. In the future, we will undoubtedly have to investmore in training schemes in certain countries, and this will meanworking out innovative partnership solutions that can beimplemented rapidly.

Today there is uncertainty about energy pricesand about the role to be played by differentenergy sources, particularly oil and gas, which are TOTAL’s core business. What is your position on the future of energy?Uncertainty is something that the energy industry has to live with,and the question of finding a balance between the different energysources is a fundamental one for us – simply becausehydrocarbons are non-renewable resources. First of all, «peak oil»could be reached 20 or 30 years from now depending on just howfast world consumption grows and how much non-conventionalreserves we can valorize. But our research and development (R&D)efforts will allow us to find solutions to the environmental issuesand to overcome new technological challenges – includingdevelopment of alternative energy sources for the future. TOTAL isan energy group and we do not limit our activities to oil and gas.Each energy source has its advantages and its most suitableapplications.

TOTAL already mines coal and you recentlyannounced that you were interested inbecoming involved in nuclear energy. Does this mean a change in strategy?The Group has had coal mining assets in South Africa for manyyears, but although mining is one of our businesses and uraniumis a mineral resource, nuclear energy is not one of our businesses.This being said, TOTAL can hardly take an interest in the future ofenergy or discuss the equilibrium between energy supply anddemand without including in that discussion nuclear energy, whichmeets part of that demand. Naturally, TOTAL’s priority is stillhydrocarbons. But we are an energy group, and we want to

QUESTIONS FORCHRISTOPHE DE MARGERIEChief Executive Officer

QUESTIONS FOR CHRISTOPHE DE MARGERIE u 9

become involved in all the different forms of energy where there areopportunities for further business growth in future. We at TOTALhave always maintained that nuclear power and hydrocarbonswere not so much competing as complementary energies.As for renewable energies such as solar power, wind energy andbiomass, they each have a role to play but I am afraid that they willnot be able to provide enough energy to make up the fossil-fuelshortfall if demand keeps on growing. Nevertheless, TOTAL isplaying an active part in developing economical renewablesolutions. We also have a duty to find other solutions to theshortfall problem, and we must help find ways to curb energyconsumption.

You are coming from the Upstream segment,which makes the greatest contribution tothe Group’s financial results. Will you begiving priority to this segment?We are an integrated group, where all segments – Upstream,Downstream, Chemicals – have their advantages and their place in the company. The main thing is to ensure that they are allintegrated and work together as well as possible. Only then canwe retain our competitive edge. We invest in all our businesssegments so that each contributes as much as it can to the growthof the whole.Today, the Downstream segment enjoys a favorable environment,with consistently high refining margins and ongoing strongdemand for refined products, particularly in Asia. Our Jubailrefinery project in Saudi Arabia is right in line with this. We are nowinvesting strongly in Refining, and between now and 2010 weexpect to commit more than €1 billion per year on average (notcounting major maintenance shutdowns). Projects includeconstruction of desulfurization units able to process larger volumesof high-sulfur crudes and produce more diesel motor fuel to meetmarket demand, and we have a coker project in the United States.The Group is also investing in the ongoing upgrade of ourEuropean refining assets so as to maintain them at the highestlevel of efficiency and reliability.As for Marketing, the Group has made a number of changesrecently: we have repositioned ourselves in the European marketand also in Africa, where we are market leader. Marketing is one of our businesses and we are the first to recognize the usefulness

of the role played by this segment, particularly in countries where we are already active in Upstream, Refining and Petrochemicalsactivities. In general terms, we try to ensure that coordinationbetween our Upstream and Petrochemicals activities enhancesthe Group’s visibility in countries where we do business. In Qatar,for example, where all of our business segments are present,TOTAL acts as a fully integrated market player.

You mentioned a changing legal and economicenvironment, with more difficult access to increasingly rare resources. Do you thinkTOTAL has the human resources needed to rise to all these challenges?The way to ensure that we are in a position to carry out all ourmajor industrial projects is by identifying well in advance the kindsof men and women we will need. In general terms, the projects we are looking at will require a wide range of skills, hard-workingand efficient people at all levels and often in jobs requiring mastery of very complex technologies. Our project teams will usually alsoinclude engineers from host countries, whom we will have to train.To succeed in this, it will be vital to pursue the ongoinginternationalization of our staffing base, with the emphasis onmanagerial positions. To achieve our aims here, we will also haveto take the necessary steps to recruit and retain the teams ofpeople we need.

Being experts in our traditional oil and gas disciplines is no longerenough today. We must also have top behavioral skills. By that I mean giving our employees the vital ability to communicate andto empathize with others so that they can be more efficient in implementing our strategy. Today’s companies are finding itindispensable to tell the outside world what they are doing.Certainly we must communicate in France, where our roots are,but we must also communicate in all the other countries where we do business. We must get closer to the local population andbecome TOTAL United Kingdom, TOTAL Nigeria, TOTALIndonesia…. It is vital to be seen by both the authorities and thecitizens of the countries where we do business as a responsibleand competent local company. As part of this effort, eachemployee must help to create TOTAL’s identity and to raiseawareness of our Group’s scope and diversity. The recent launchof our corporate advertising campaign in China, the Middle Eastand Canada is part of this approach, whose final aim is to raiseawareness of TOTAL and help us conclude more developmentpartnerships with national companies, not only to valorize theirown resources but also to carry out joint projects in other countries.

Christophe de MargerieChief Executive Officer

Christophe de Margerie

10 o TOTAL IN 2006

CORPORATEGOVERNANCE

CORPORATE GOVERNANCE u 11

12 o TOTAL IN 2006

Board of DirectorsThe following individuals were members of the Board ofDirectors of TOTAL S.A. in 2006:

Thierry Desmarest

61 years old. Chairman and Chief ExecutiveOfficer of TOTAL S.A. from May 31, 1995 to February 14, 2007, then Chairman of the Board of Directors of TOTAL S.A.

since February 14, 2007. Chairman and Chief Executive Officer of Elf Aquitaine sinceFebruary 15th 2000. Director of Sanofi-Aventis and of AirLiquide. Member of the Supervisory Board of AREVA.

Daniel Boeuf

58 years old. Director of TOTAL S.A.representing employee shareholders since2004. Responsible for training and skillsmanagement in specialties within the Refining & Marketing division.

Daniel Bouton

56 years old. Independent Director.Director of TOTAL S.A. since 1997Chairman and Chief Executive Officer ofSociété Générale. Director of Schneider Electric S.A. and Veolia Environnement.

Bertrand Collomb

64 years old. Independent Director.Director of TOTAL S.A. since 2000Chairman of the Board of Directors of Lafarge.Director of Atco.

Paul Desmarais Jr

52 years old. Independent Director.Director of TOTAL S.A. since 2002.Chairman of the Board and co-Chief ExecutiveOfficer of Power Corporation of Canada.

Vice-Chairman and Deputy Managing Director of PargesaHolding S.A. Vice-Chairman of the Board of Directors andmember of the Strategic Committee of Imerys.Member of the Board of Directors and Executive Committee of The Great-West Life Assurance Company, of GroupeBruxelles Lambert S.A., of London Insurance Group Inc and of Mackensie Inc. Director of Suez.

Jacques Friedmann

74 years old. Independent Director.Director of TOTAL S.A. since 2000 to May 12,2006. Director of LVMH.

Bertrand Jacquillat

62 years old. Independent Director.Director of TOTAL S.A. since 1996.University professor. Chairman and ChiefExecutive Officer of Associés en Finance.

Member of the Supervisory Board of Klepierre and of PressesUniversitaires de France (PUF).

The DirectorsMembers of the Board of Directors are appointed by theShareholders’ Meeting for a three-year term. In case of the resignation or death of a Director, the Board may appoint a replacement Director on a temporary basis and this appoint-ment must be ratified by the next Shareholders’ Meeting. The terms of office of the members of the Board are stagge-red to more evenly space the renewal of appointments.

In 1995, TOTAL established two special committees of theBoard of Directors: the Nominating & CompensationCommittee and the Audit Committee. In February 2007, the Board decided to split the Nominating & CompensationCommittee into two separate committees: the Nominating & Governance Committee and the Compensation Committee(see p.15).

In 2003, the Board of Directors amended the corporategovernance rules initially adopted in 1995 and in 2001 to takeinto account recent developments in this area, including therecommendations contained in the AFEP-MEDEF (FrenchEmployers’ Federation) report published in September 2002.

In 2004, the Board of Directors adopted a Code of FinancialEthics that, in the overall context of the Group’s Code ofConduct, details the obligations of the Chief Executive Officeras well as the Group’s senior managers responsible for financialand accounting matters. The Board has made the AuditCommittee responsible for ensuring compliance with this Code.

In 2005, the Board of Directors amended the AuditCommittee’s charter to clarify its role in supervising theGroup’s statutory auditors and the criteria governing the inde-pendence of the Committee’s members. The Board also setup an Audit Committee alert process governing irregularities inaccounting, internal accounting controls or auditing matters.

In 2006, at the end of Mr. Jacques Friedmann’s term of officeas Director, Mr. Antoine Jeancourt-Galignani, an independentDirector, was designated to succeed Mr. Friedmann as mem-ber and Chairman of the Audit Committee and as that com-mittee’s financial expert.

In February 2007, the Board decided to separate the func-tions of Chairman of the Board of Directors and ChiefExecutive Officer of the Company (see pp.15 and 16).

Furthermore, since 14 May, 2004, the Board includes aDirector (Mr. Daniel Boeuf) designated to represent employeeshareholders and elected by the Shareholders’ Meeting.

The mode of functioning of the Group’s administrative andmanagerial bodies has been defined in accordance with thecorporate governance practices generally followed by compa-nies whose shares are listed on a regulated stock market.

For further information, please consult TOTAL’s “Registration Document 2006”, which is available in print or by accessing in the Group’s web site www.total.com

BOARD OF DIRECTORS u 13

Antoine Jeancourt-Galignani

69 years old. Independent Director.Director of TOTAL S.A. since 1994.Former Chairman of Assurances Générales de France (AGF). Chairman of the Supervisory

Board of Euro Disney SCA.Director of Gecina, of SociétéGénérale, of Assurances Générales de France and of Kaufman &Broad S.A. Member of the Supervisory Board of Oddo et Cie.

Anne Lauvergeon

47 years old. Independent Director.Director of TOTAL S.A. since 2000.Chairman of the Management Board of AREVA.Director of Suez and of VODAFONE Group Plc.

Vice-President and Member of the Supervisory Board of SAFRAN.

Peter Levene of Portsoken

65 years old. Independent Director.Director of TOTAL S.A. since 2005.Chairman of Lloyd’s, of International FinancialServices London and of General Dynamics UK Ltd.

Maurice Lippens

63 years old. Independent Director.Director of TOTAL S.A. since 2003.Chairman of Fortis and of Compagnie Het Zoute.Director of Groupe Bruxelles Lambert and ofBelgacom.

Christophe de Margerie

55 years old. Director of TOTAL S.A. since May 12, 2006.Member of the Executive Committee of TOTALsince 1999.

President Exploration & Production, TOTAL, until February 13, 2007.Chief Executive Officer of TOTAL S.A. since February 14, 2007

Michel Pébereau

64 years old. Independent Director.Director of TOTAL S.A. since 2000.Chairman of BNP Paribas. Director of Lafarge, of Saint Gobain and of Pargesa Holding S.A.

Member of the Supervisory Board of Axa. Chairman of theEuropean Banking Federation.

Thierry de Rudder

57 years old. Independent Director.Director of TOTAL S.A. since 1999.Acting Managing Director of Groupe Bruxelles Lambert. Director of Suez and Imerys.

Jürgen Sarrazin

70 years old. Independent Director.Director of TOTAL S.A. since 2000.

Serge Tchuruk

69 years old. Independent Director.Director of TOTAL S.A. since 1989.Chairman of the Board of Alcatel-Lucent.Director of Thalès.

Pierre Vaillaud

71 years old. Independent Director.Director of TOTAL S.A. since 2000.Chairman Former Chief Executive Officer of ElfAquitaine and of Technip. Director of Technip.

Member of the Supervisory Board of Oddo et Cie.

Director IndependenceThe Committee proposed to the Board a list of independentdirectors based on generally recognized corporate governanceprinciples. The Nominating & Compensation Committeeproposed that the Board consider a director to be independentwhen that director has “no relationship, of any nature, with theCompany, group or its management which could compromisethe independent exercise of his judgment”, pursuant to theAFEP-MEDEF (French corporate associations) report of 2002.At its meeting on February 13, 2007, the Board, acting on aproposal from the Committee, determined that, as of December31, 2006, the following directors were independent: Messrs.Bouton, Collomb, Desmarais, Jacquillat, Jeancourt-Galignani,Levene of Portsoken, Lippens, Pébereau, de Rudder, Tchurukand Vaillaud. These directors meet the independence criteriacontained in the AFEP-MEDEF report of 2002, with the exceptionof Mr. Tchuruk, who has been a director of the Company for aperiod exceeding the twelve years recommended by the report.The Board, taking into account the nature of the Company’sindustry, with the associated long-term investments andactivities, considered that service as a director over a long periodcorresponds to certain experience and authority that strengthensthe independence of a director. Upon this basis, the Boardconcluded that Mr. Tchuruk was an independent director. In evaluating the independence criteria under the report related tomaterial client, supply, banking or investment bankingrelationships between a director and the Company, the Boardconsidered that the business dealings between Groupcompanies and the banking institutions where Messrs. Boutonand Pébereau are members of the administrative or managementbodies are not material since these dealings represent less than0.1% of their net banking income. The Board concluded that Messrs. Bouton and Pébereau wereindependent directors. Under this evaluation, 73.3% of themembers of the Board of Directors are considered to beindependent. The Board also noted that there were no potentialconflicts of interest between the Company and its directors.

Directors’ Charter The Directors’ Charter specifies the obligations of each directorand sets forth the roles and working procedures of the Board ofDirectors

Obligations of DirectorsEach director is committed to maintain the independence of his analysis, judgment, decision and action as well as not to be undulyinfluenced. When a director participates in and votes at Boardmeetings, he is required to represent the interest of the sharehol-ders and the Company as a whole. Directors must actively partici-pate in the affairs of the Board, specifically on the basis of informa-tion communicated to him by the Company. Each director mustinform the Board of conflicts of interest that may arise, includingthe nature and terms of any proposed transactions that could giverise to such situations. If he is opposed to a project brought beforethe Board, he is required to clearly express his opposition.Directors must hold at least the minimum number of registeredshares specified by the Company by-laws and comply strictly withprovisions regarding the use of material non-public information.

Board of Directors’ roleThe Board of Directors’ role is to determine the strategic vision forthe Group and supervise the implementation of this vision. With theexception of the powers and authority expressly reserved for shareholders and within the limits of the Company’s legal purpose,the Board may address any issue related to the operation of theCompany and take any decision concerning the matters fallingwithin its purview. Within this framework, the Board’s duties andresponsibilities include, but are not limited to, the following:• appointing the officers responsible for managing the Company

and supervising their actions;• defining the Company’s strategic orientations and, more

generally, those of the Group;• considering major transactions to be pursued by the Group;• receiving information on significant events related to the

Company’s affairs;• monitoring the quality of information supplied to shareholders

and the financial markets through the financial statements that itapproves and the annual report, or when major transactions areconducted;

• convening and setting the agenda for shareholders meetings;• preparing, for each year, a list of the directors it deems to be

independent under generally recognized corporate governancecriteria; and

• conducting audits and investigations as it may deem appropriate.

The Board, with the assistance of its specialized committeeswhere appropriate, ensures the following:• that authority within the Company has been properly delegated

before it is exercised, and that the various entities of theCompany respect the authority, duties and responsibilities theyhave been given;

• that no individual is authorized to both contract and reimburse obligations of the Company without proper supervision and control;

• that the internal audit function operates properly and that theindependent auditors are able to conduct their audits underappropriate circumstances; and

• that the committees it has created duly perform their responsibilities.

Functioning of the BoardThe Board regularly (at least every three years) conducts an evaluation of its own practices. Each year it also discusses itsperformance.

Board MeetingsThe Board of Directors convenes at least four times each year andmore often should circumstances require it.

The Board held seven meetings in 2006, with an average atten-dance of 86.2%. The agenda for these meetings included, but was not limited to,the following subjects:• 2006 Budget;• Group insurance policy;• summary of Ethics Committee activity;• 2005 accounts (consolidated financial statements, parent com-

pany accounts);• Group finance policy;• evaluation of the independence of directors and discussion of

the Board’s performance;• approval of the Arkema spin-off and related terms;• convocation of the shareholders’ meeting and approval of the

documents related to this meeting;• strategic outlook for the Chemicals division, for the Gas & Power

division, for the Exploration & Production division and for theRefining & Marketing division;

• earnings for the first quarter 2006 and information on adjust-ments under IFRS to the 2004 accounts;

• update on CEPSA developments;• award of stock options and restricted share grants;• presentation of final earnings for the first half 2006 and mid-

2006 outlook;• presentation of the Jubail (Saudi Arabia) refinery construction

project;• Group strategy and five-year plan;• earnings for the third quarter 2006;• distribution of an interim dividend.

14 o TOTAL IN 2006

For further information, please consult TOTAL’s “Registration Document 2006”, which is available in print or by accessing in the Group’s web site www.total.com

Audit CommitteeThe Audit Committee’s role is to assist the Board of Directors inensuring effective internal financial control and oversight andappropriate disclosure to shareholders and the financial markets.The Audit Committee’s duties include:• recommending the appointment of independent auditors, their

compensation and ensuring their independence;• establishing the rules for the use of independent auditors for

non-audit services;• examining the accounting policies used to prepare the financial

statements, examining the parent company annual financial statements and the consolidated annual, semi-annual, and quarterly financial statements prior to their examination by theBoard, after regularly monitoring the financial situation, cash flowstatement and obligations of the Company;

• reviewing the implementation of internal control procedures andthe evaluation of their effectiveness with the assistance of theinternal audit department;

• reviewing the creation and activities of the disclosure committee,including reviewing the conclusions of this committee;

• approving the scope of the annual audit work of internal andexternal auditors;

• keeping regularly informed of completed audits, examining inter-nal audit reports and other reports (independent auditors, annualreport, etc.);

• examining the appropriateness of risk oversight procedures; • examining the choice of appropriate accounting principles and

methods;• examining the Group’s policy for the use of derivative instru-

ments;• giving, if requested by the Board, its opinion regarding major

transactions contemplated by the Group;• annually reviewing significant litigation;• implementing and monitoring compliance with the Financial

Code of Ethics;• proposing to the Board, for implementation, a procedure for

complaints or concerns of employees, shareholders and others,related to accounting, internal accounting controls or auditingmatters; and

• examining the procedure for booking the Group’s proved reserves.

The Committee is made up of at least three directors designated by the Board of Directors. During 2006, the members of the Audit Committee were: Mr. Jacques Friedmann (Chairman until May 12, 2006) then Mr. Antoine Jeancourt-Calignani, as well as Messrs. BertrandJacquillat and Thierry de Rudder, all independent Directors.

The Committee meets at least four times a year to examine the consolidated annual and quarterly financial statements. The Committee may also meet with the Chairman or the ChiefExecutive Officer, perform inspections and consult with managersof operating or non-operating departments, as may be useful inperforming its duties. The Committee meets with the independentauditors and submits written reports to the Board of Directorsregarding its work.

The Audit Committee met six times during 2006.

Nominating & CompensationCommitteeThis Committee performs the following specific tasks:1. With respect to nominations:• assists the Board in the selection of directors, corporate officers,

and Directors as Committee members;• recommends annually to the Board the list of directors who may

be considered as “independent directors” of the Company; and• proposes methods for the Board to evaluate its performance.

2. With respect to compensation:• makes recommendations and proposals to the Board regarding:

(i) compensation, pension and insurance plans, in-kind bene-fits, and other compensation, including severance benefits,for the Chairman or the Chief Executive Officer of TOTAL S.A.;and

(ii) awards of stock options and restricted share grants, includingspecific awards to the Chairman or the Chief ExecutiveOfficer;

• reviews the compensation of members of the ExecutiveCommittee, including stock option plans, restricted share grantsand equity-based plans as well as pension and insurance plansand in-kind benefits.

The Committee is made up of at least three directors designated bythe Board of Directors. The members of the Committee are:Messrs. Bertrand Collomb, Michel Pébereau and Serge Tchuruk, allindependent directors. The Committee is chaired by Mr. MichelPébereau. The Committee meets at least twice a year and met three timesduring 2006. The Committee invites the Chief Executive Officer of the Companyto present recommendations. The Chief Executive Officer may notbe present during deliberations regarding his own compensation.

ADMINISTRATION & COMMITTEES u 15

Recent Corporate Governance Developments

At its meeting on February 13, 2007, the Board of Directors, acting on a proposal by the Nominating & Compensation Committee, enacted certain changesrelated to the Group’s corporate governance, effective as of February 2007. The Board amended the DirectorsCharter, subsequently renamed the Rules of Procedure of the Board of Directors, mainly to take into account the fact that separate individuals would serve as Chairmanand as Chief Executive Officer and to create a separateNominating & Governance Committee and CompensationCommittee to divide the duties of the former Nominating & Compensation Committee. The Board also adopted charters for these committees. Also on February 13, 2007, the Board of Directors appointed Mr. Christophe de Margerie as Chief ExecutiveOfficer of the Company. Mr. Thierry Desmarest remainsChairman of the Board of Directors.

THE EXECUTIVE COMMITTEE &THE MANAGEMENT COMMITTEE

Composition of the Executive Committee after February 13, 2007

On February 14, 2007, Christophe de Margerie was appointedChief Executive Officer of TOTAL S.A., with Thierry Desmarestcontinuing to serve as non-executive Chairman of the Board ofthe Company. From February 14, 2007, Christophe de Margerie is thePresident of TOTAL’s Executive Committee and of TOTAL’s

16 o TOTAL IN 2006

Meeting of the Executive Committee on 13 February, 2007 (from left to right):

Bruno Weymuller, François Cornélis, Christophe de Margerie, Thierry Desmarest, Michel Bénézit, Yves-Louis Darricarrère, Robert Castaigne.

Management Committee. Yves-Louis Darricarrère replacedChristophe de Margerie as President of the Exploration &Production division of the Group. Jean-Jacques Guilbaud,President of the Human Resources & Communications depart-ment of the Group was appointed as a member of the ExecutiveCommittee on February 19, 2007.

THE EXECUTIVE COMMITTEE & THE MANAGEMENT COMMITTEE u 17

I THE EXECUTIVECOMMITTEE (COMEX)

The following individuals were serving as members of TOTAL’s Executive

Committee as of December 31, 2006:

Thierry Desmarest (a)

Chairman of the COMEX (Chairman and Chief Executive Officer);François CornélisVice-Chairman of the COMEX (President of the Chemicalsdivision);Michel Bénézit(President of the Refining-Marketing division)Robert Castaigne(Chief Financial Officer)Yves-Louis Darricarrère(President of the Gas & Power division);Christophe de Margerie (b)

(President of the Exploration & Production division); andBruno Weymuller(President of the Strategy & Risk assessment department)

I THE MANAGEMENTCOMMITTEE (CODIR)

In addition to the members of the COMEX, the following23 individuals from various non-operating departments andoperating divisions were serving as members of TOTAL’sManagement Committee as of December 31, 2006:HoldingJean-Pierre Cordier, Yves-Marie Dalibard, Jean-Michel Gires, Jean-Jacques Guilbaud, Peter Herbel, Ian Howat, Jean-Marc Jaubert, Patrick de La Chevardière, Jean-François MinsterUpstreamPhilippe Boisseau, Jean-Marie Masset, Charles Mattenet, Patrick Pouyanné, Jean PriveyDownstreamAlain Champeaux, Alain Grémillet, François Groh, Éric de Menten, Jean-Jacques Mosconi, André TricoireChemicalsPierre-Christian Clout, Françoise Leroy, Hugues Woestelandt

u THE EXECUTIVE COMMITTEE (COMEX)

is the primary decision-making body of the Group. It implements the strategy formulated by the Boardof Directors and authorizes related investments.

u THE MANAGEMENT COMMITTEE (CODIR)

of the Group facilitates coordination among the divisions and monitors the operating results and activity reports of these divisions.

I TOTAL’SACTIVITIES

• The Upstream segment includes the exploration and production of hydrocarbons, gas, power and other energiesactivities.

• The Downstream segment includes refining and marketingactivities along with trading and shipping activities.

• The Chemical segment includes Base Chemicals andSpecialties.

The Holding Division includes all the usual functional and financialactivities as well as the financial interest in Sanofi-Aventis.

I STATUTORYAUDITORS

Statutory auditors• Ernst & Young Audit41, rue Ybry, 92576 Neuilly-sur-Seine CedexG. Galet - P. Diu

• KPMG AuditDépartement de KPMG S.A.1, cours Valmy, 92923 Paris-La DéfenseR. Amirkhanian

Alternate auditors• Jean-Luc Decornoy2 bis, rue de Villiers, 92300 Levallois-Perret

• Pierre Jouane41, rue Ybry, 92576 Neuilly-sur-Seine Cedex

The terms of office of the statutory auditors and of the alternateauditors expire at the conclusion of the shareholders’ meeting called to approve the financial statements for the fiscal year 2009.

(a) Until 13 February 2007.(b) Chairman of the Executive Committee (Chief Executive Officer) since 14 February 2007.

February 14, 2007

Strategy& Riskassessment

AuditInformationTechnologyTelecommunications

IndustrialSafety

SustainableDevelopment& Environment

Strategy

Africa

Middle East

Americas

Asia& Far East

Continental Europe& Central Asia

Upstream

Ethics CommitteeScientific Division

Exploration& Production Gas & Power

EuropeNorth Atlantic

South AmericaAfricaMiddle EastAsia

Trading& Marketing

Liquefied NaturalGas

RenewableEnergies,Strategy,Human Resources& Communications

Finance& Administration

TechnologyDevelopmentOperations& Pau Unit

StrategyBusinessDevelopment& R&D

Finance& InformationTechnology

Human Ressources& InternalCommunications

Northern Europe Geosciences

18 o TOTAL IN 2006

ORGANIZATIONAL CHART

Finance

Insurance Finance Legal Affairs CorporateCommunications

Humans Resources& CorporateCommunications

ExecutiveCareerManagement

(a) The Trading & Shipping division reports to the CFO.

ChemicalsDownstream

ExecutiveCommittee

Chief Executive Officer

Board of Directors

ManagementCommittee

Refining& Marketing

Trading & Shipping (a) Refining Africa

Middle East Petrochemicals Administration

Specialties(Bostik, Cray Valley,Sartomer, Atotech)

Fertilizers(Grande Paroisse)

Rubber processing(Hutchinson,Mapa Spontex)

Asia

Administration

StrategyDevelopmentResearch

Marketing Europe

Specialities

Human Resources& InternalCommunications

Crude Oil Trading

Products Trading

Products& DerivativesTrading

Shipping

Human Resources& Communications

ORGANIZATIONAL CHART u 19

20 o TOTAL IN 2006

COMPANYACTIVITIES

ACTIVITIES u 21

I HIGHLIGHTS OF 2006

JanuaryAngola Confirmation of the potential of the Gengibre discovery on Block32 in the ultra-deep offshore. The exploration well tested at 4,540barrels of oil per day from the Miocene objectives and 5,100 barrels per day from the Oligocene objectives. Production start-up on BBLT (Benguela Belize Lobito Tomboco) onBlock 14 in Angola’s deep offshore zone (TOTAL, 20%)

Nigeria TOTAL receives the first cargo of LNG from train 4 of the NigeriaLNG (NLNG) liquefaction plant, in which the Group has a 15% inte-rest. This shipment is part of the sales and purchase agreementbetween TOTAL Gas & Power Ltd and NLNG for 1.15 millionmetric tons of LNG per year.

NorwayTOTAL acquires an additional 30% interest in the Victoria disco-very, bringing its overall stake to 50%, and disposes of 5% of itsinterest in the Tyrihans field. Production start-up on Victoria isscheduled for 2009 and a first production plateau should occurabout 2011 with an estimated (100%) output of 70,000 barrels of oil equivalent per day.

United KingdomProduction start-up on the Forvie gas and condensates field in the North Sea (TOTAL operator, 100%). Forvie North is expectedto produce about 20,000 barrels of oil equivalent per day during its plateau phase.

Yemen Oil discovery at the Jathma-1 well, on Block 10 in the East Shabwadevelopment zone (TOTAL operator, 28.57%).

February AngolaFifth oil discovery in the eastern part of Block 32 (TOTAL operator,30%) in Angola’s ultra deepwater zone about 14 kilometers southof Canela-1 and 15 kilometers south-east of Gengibre-1, the dis-coveries made on the same block in 2004 and 2005 respectively.

AustraliaTOTAL awarded two offshore exploration permits about 150 kilo-meters off the north-west coast of Australia in water about 1,400meters deep.

LibyaNew oil discovery on Block NC 186 (TOTAL, 24%) in the MurzukBasin, about 800 kilometers south of Tripoli. Exploration well K1tested at 2,300 barrels of oil per day.

NorwayThe Norwegian parliament approved the development plan for the Tyrihans field (TOTAL, 21.51%). Tyrihans is located in theHaltenbanken area of the Norwegian North Sea, about 170 kilo-meters from the coast in water 285 meters deep. Production start-up is scheduled for 2009 and a first production plateau should bereached by about 2011 with about 70,000 barrels of oil equivalentper day.

United StatesTOTAL focuses on exploration and production in the Gulf ofMexico, following the signature of an agreement to sell two mature

fields, Bethany and Maben, located in eastern Texas andMississippi respectively, to XTO Energy Inc.

MarchBangladeshTOTAL acquired a 60% interest in offshore Exploration Blocks 17and 18, located off the south-east coast of Bangladesh. The blocks, with a combined area of nearly 14,000 square kilome-ters, are in water about 20 meters deep.

CameroonTOTAL was awarded the Bomana exploration block (TOTAL ope-rator, 100%) in the Rio Del Rey offshore basin. The block, covering140 square kilometers, is located close to the concessions alreadyoperated by TOTAL in Cameroon.

ChinaTOTAL and PetroChina signed a production-sharing agreementcovering appraisal, development and production of natural gas onChina’s Sulige South Block, covering an area of nearly 2,390square kilometers in the Ordos Basin (Inner Mongolia).

Republic of CongoOil discovery on the ultra-deepwater Mer Très Profonde Sud permit, about 180 kilometers south of Pointe Noire in the Republicof Congo.

United KingdomProduction start-up on the Glenelg offshore gas and condensatesfield in the British North Sea, 240 kilometers east of Aberdeen inwater about 100 meters deep. The Group has successfully drilleda deviated well 7,300 meters long from the Elgin platform, reachingit target (a very-high temperature and pressure reservoir – 200 °Cand 1,150 bars) 5,600 meters below sea level. The well has thepotential to produce about 30,000 barrels of oil equivalent per day.

AprilSpain

The Netherlands Arbitration Institute (NAI) delivered its decision to bothparties, Santander Central Hispano (SCH) and TOTAL, in the arbitra-tion concerning CEPSA. The decision provides for the return to TOTALof its 8.31% interest in CEPSA currently held via Somaen Dos, a holding company in which SCH and TOTAL are shareholders; the recognition of TOTAL’s right to exercise its call option against SCHover 4.35% of CEPSA at a price then estimated at below €5 per share.

22 o TOTAL IN 2006

United StatesPositive test on well N° 1 on the Alaminos Canyon 856 Block(TOTAL operator, 70%) offshore in the Gulf of Mexico. The well,drilled to a depth of 4,450 meters in water 2,320 meters deep, is about 225 kilometers east of the Texas coast.

MayAlgeriaGas discovery in the Timimoun Perimeter (TOTAL operator,63.75%) in southwest Algeria. Exploration well MJB-3 tested at235,000 cubic meters per day.

AustraliaTOTAL signed two agreements to take part in exploration on fournew offshore blocks off the north-west coast of Australia. The blocks are located between 300 and 400 kilometers from the coast in water between 1,000 and 3,000 meters deep.

FranceThe General Shareholders’ Meeting of TOTAL S.A. approved the spin-off of Arkema. Since October 1, 2004 this company hasmanufactured vinyl products, industrial chemicals and perfor-mance products.

Saudi ArabiaTOTAL and the Saudi Arabian Oil Company (Aramco) signed aMemorandum of Understanding for the constriction and operationof an oil refinery with a capacity of 400,000 barrels per day at Jubailin Saudi Arabia. The refinery, which is expected to become opera-tional in 2011, will have deep conversion capacity and will producefor export. It will process Arabian Heavy crude into very high qualityrefined products meeting the most stringent standards.

JuneCameroonOil discovery on the first exploration well drilled on the Dissoni offshore block in the Rio Del Rey area.

France/SpainInauguration of the Euskadour international gas interconnector linking the grids in the Basque region of France and Spain. Duringits first phase, the 28-kilometer Euskadour gas pipeline will carryabout 500 million cubic meters of natural gas per year (equivalentto the annual consumption of the French city of Bordeaux) bothways across “the Pyrenees”.

IndonesiaTOTAL provided assistance to victims of the earthquake on theisland of Java and donated $1 million to the Indonesian Red Cross

JulyFranceStart-up of the hydrogen production unit (Steam MethaneReformer-SMR) at the Normandy refinery near Le Havre. This start-up marks the first step in the commissioning of the new distillatehydrocracker (DHC).

LibyaOil discovery on Block NC 191 (TOTAL operator, 100%) in thesouthwest of Libya, about 800 kilometers south of Tripoli.

NigeriaTOTAL signed a farm-in agreement with Amni InternationalPetroleum Development Company Ltd to acquire a 40% interest in two offshore oil mining licenses, OML 112 and OML 117, to thesoutheast of the Nigerian coast. An appraisal well, Ima 12, confir-med the potential of gas reserves in the zone.

Republic of CongoOil discovery on the offshore Moho-Bilondo permit (TOTAL opera-tor, 53.5%) about 80 kilometers off the coast of the Republic ofCongo in water between 600 and 900 meters deep.

United StatesSecond oil discovery on the Alaminos Canyon 856 Block in theGulf of Mexico (TOTAL operator, 70%). Well N°2, drilled to a depthof 4,760 meters in water 2,380 meters deep, tested positive,encountering oil pay over a thickness of 26 meters in the mainobjective.

AugustAustraliaSignature of an agreement with Japanese energy company INPEXto acquire a 24% interest in Block WA 285-P, located in approxi-mately 250 meters of water offshore northwestern Australia. The Block WA 285-P, contains the Ichthys gas field, discovered in 2000.

IndonesiaSignature of an agreement for TOTAL to acquire a 49% interest inthe offshore East Sepanjang Block, located northeast of the islandof Java, in Indonesia. Subject to certain conditions, TOTAL maysubsequently acquire an additional 41% interest.

Yemen: transporting pipeline sections forYemen LNG Ltd

o

France: part of the new distillatehydrocracker (DHC) at the Normandyrefinery

u

HIGHLIGHTS u 23

NigeriaTOTAL acquires Chevron’s interest in the Brass LNG liquefiednatural gas project in the Niger delta, 90 kilometers west of PortHarcourt, in Nigeria. The first phase of the project provides for twoliquefaction trains each producing 5 million metric tons per year,with production mainly intended for the European and Americanmarkets.

SpainSignature of an agreement between TOTAL and Banco SantanderCentral Hispano (Santander) to implement the provisions of thepartial award made in March 2006 by the Netherlands ArbitrationInstitute, which adjudicated their dispute concerning CEPSA.Under the agreement, the CEPSA shares held by investment vehi-cle Somaen Dos which are due to TOTAL were returned immedia-tely. TOTAL now directly owns 44.5% of CEPSA’s share capital.

United StatesTOTAL was awarded 20 deep-offshore exploration blocks in thewestern zone of the Gulf of Mexico, as part of Lease Sale 200. The blocks will be operated by Total E&P USA Inc. with a 100%interest.

SeptemberColombiaA consortium comprising TOTAL (50%), Hocol (operator, 20%,subsidiary of Maurel & Prom) and Talisman (30%) was awardedexploration rights for the Niscota block in Colombia.

ItalyTOTAL signed a final agreement with the regional authorities inBasilicate (southern Italy) to develop the Tempa Rossa field. Thisfield, due to start producing in 2010, will yield plateau productionof about 50,000 barrels of oil per day. The agreement also sets out the Group’s commitment regardingenvironmental protection and social programs in the region.

SpainTOTAL acquired 4.35% of CEPSA share capital from Santander, as the result of an agreement signed in August 2006. TOTAL nowowns 48.83% of CEPSA.

OctoberAngolaConfirmation of the potential of a fourth production zone on Block 17(TOTAL operator, 40%) with the discovery of Orquidea-2 in Angola’s deep offshore.

MexicoThe Altamira regasification terminal in Mexico began commercialoperations. The facility, the first of its type to be built in Mexico, willmake a significant contribution to the country’s gas supply.

NovemberArgentinaTOTAL disposed of its power-generation assets in Argentina.Leveraging its position as the country’s second-largest gas supplier,the Group will now focus on the exploration-production segment.

CanadaStart-up of the commercial production phase of the Joslyn projectin Canada’s Athabasca region, about 60 kilometers north-west of Fort McMurray, in Alberta Province.

FranceSignature, under the auspices of the French Prime Minister’s office,of a “Charter to Foster the Use of Superethanol E85” in France.The Group is committed to equip between 200 and 275 retail stations, more than 40% of the number deemed necessary inFrance by end-2007 by the Prost study Group.Start-up of the distillate hydrocracker (DHC) at the Normandy refinery.

IndonesiaGas discovery located between the Tunu and Peciko fields, on theoffshore Mahakam permit.

NetherlandsTOTAL awarded an exploration permit for Block L3 on theNetherlands continental shelf. The block, covering 406 square kilometers, is 100 kilometers north of Den Helder in water about 40 meters deep.

United KingdomPromising oil and gas discoveries in the Alwyn zone. This zone in theBritish North Sea includes a number of producing fields – AlwynNorth, Dunbar, Grant, Ellon, Nuggets and Forvie North – all ownedand operated by TOTAL. The new discovery is 160 kilometers eastof the Shetland and 440 kilometers north-east of Aberdeen.The Jura West 3/15-10 well, drilled 10 kilometers to the east of theDunbar field, could start producing in 2008. A second develop-ment well and another exploration well nearby are already planned.Jura West is expected to start production in 2008, via a 3 kilome-tre tie-back to the Forvie North subsea manifold which is linked to the Alwyn North NAB process platform.These discoveries come only weeks after a previous explorationwell (3/9 a-N50), drilled from the NAA platform on Alwyn North,encountered 85 meters of sand containing gas reservoirs in

Canada: the Joslyn project in Athabasca

o

Qatar: the Dolphin project multi-phase gastreatment plant at Ras Laffan

u

24 o TOTAL IN 2006

FebruaryAngolaTwo new oil discoveries on the eighth and ninth exploration wells onBlock 32 (TOTAL operator, 30%) in Angola’s ultra-deep offshore.

AustraliaTOTAL signed an agreement to farm into the offshore permitAC/P37 in Australia’s Browse Basin. The permit, which covers4,415 square kilometers, is located about 200 kilometers off thenorth-west coast in water about 200 meters deep. TOTAL has an80% interest and is operator for the lower levels of the permit.

FranceTOTAL launched a CO2 capture and sequestration pilot project in the Lacq basin in southwest France. The project, which levera-ges a technique considered among the most promising in the fightagainst climate change, calls for up to 150,000 metric tons of CO2

to be injected into a depleted natural gas field at Rousse over a period of two years starting in late 2008.

NigeriaTOTAL and Nigeria LNG Ltd (NLNG) sign a 20-year sales and purchase agreement under which TOTAL will lift 1,375 millionmetric tons per year of LNG to be produced by NLNG’s train 7.Promising discoveries and the launch of studies for a new stand-alone development on the Egina field in Nigeria’s deep-offshore zone.

United KingdomTOTAL was awarded three new permits in the British North Sea. The Group now has a 36% interest in Blocks 206/3 and 206/4.These two blocks, located 80 kilometers west of the Shetland,enhance the gas potential of the neighboring Laggan zone. TOTALalso has a 100% interest in Block 3/8f near the Alwyn field, about420 kilometers north-east of Aberdeen.

MarchAngolaInauguration of the deep-offshore Dalia field by Angola’s OilMinister, Desiderio Costa, in the presence of the President of thenational company Sonangol (Sociedade Nacional de Combustíveisde Angola), Manuel Vicente and TOTAL’s Chief Executive Officer,Christophe de Margerie. Dalia, located on the prolific Block 17where 15 discoveries have now been made, was brought into production in December 2006. Output from the field could be ashigh as 240,000 barrels per day.

FranceTOTAL put into service its first retail station pumps supplyingsuperethanol motor fuel. This new biofuel, with a very high ethanolcontent (up to 85%), will allow flexfuel vehicles to run on super-ethanol, unleaded super 95 or 98 or any blend of these fuels. Inauguration of the distillate hydrocracker (DHC) at the Normandyrefinery.

IndonesiaTOTAL was awarded a new exploration block, South EastMahakam, in the Mahakam delta (offshore from East Kalimantan,Indonesia). The Group is operator with a 50% interest.

United KingdomStart of development of the Jura gas and condensates field, onlyfour months after it was discovered. Jura is expected to go intoproduction in the second quarter of 2008 and to reach plateauproduction of about 45,000 barrels of oil equivalent per day.

the Stratfjord formation as well as 60 meters of oil in the Brent formation above it.

DecemberAngolaStart of production on the Dalia field on Angola’s deep-offshore Block17. The field, which was discovered in 1997 some 135 kilometersfrom the coast in water between 1,200 and 1,500 meters deep,holds an estimated 1 billion barrels of recoverable reserves. Plateauproduction should reach 240,000 barrels of oil equivalent per day.

AzerbaijanStart of commercial gas production on the Shah Deniz gas deve-lopment project in the Caspian. Shah Deniz lies off the coast of Azerbaijan about 70 kilometers south of Baku.

FranceTOTAL and French electricity utility EDF inaugurated a photovoltaicsolar panel plant owned by their joint venture subsidiary TENESOL.The plant is in Saint-Martin-du-Touch on the outskirts of Toulouse(southern France).

GabonSignature of an exploration and production-sharing contract with theGabon authorities for the offshore Diaba permit. This permit, covering9,075 square kilometers, lies about 50 kilometers off the southerncoast of Gabon at water depths ranging from 100 to 2,500 meters.

QatarTOTAL finalized acquisition of a 16.7% interest in the second trainof Qatargas II and also took an 8.35% stake in the South HookLNG import terminal in the United Kingdom.

I HIGHLIGHTS OF THE 1ST

QUARTER OF 2007JanuaryAngolaOil discovery on the sixth exploration well (Salsa-1) drilled on Block32 (TOTAL operator, 30%) in Angola’s ultra-deep offshore, about15 kilometers south-west of the Mostarda-1 discovery.Oil discovery on the deep-offshore Block 14 (TOTAL, 20%), in theLower Congo Basin off the coats of Angola.

ThailandGas discoveries on three exploration wells – Ton Chan-1X, TonChan-2X and Ton Rang-2X – drilled on Blocks 15 and 16, opera-ted by the Thai national company PTTEP in the Gulf of Thailand.

HIGHLIGHTS u 25

26 o TOTAL IN 2006

uu TOTAL’s Upstream segment includes Exploration & Production andGas & Power activities.The Group has explorationand production activities in42 countries and produces oilor gas in 30 countries.

2.36 Mboe/d produced in2006.

11.1 Bboe of proved reservesas of December 31, 2006*.

9.0 B€ invested in 2006.

14,862 employees.* Based on year-end Brent price of 58.93 $/b.

UPSTREAM

UPSTREAM SEGMENT FINANCIAL DATA

(in M€) 2006 2005 2004

Non-Group Sales 20,782 20,888 15,037

Adjusted operating income 20,307 18,421 12,844

Adjusted net operating income 8,709 8,029 5,859

UPSTREAM / EXPLORATION & PRODUCTION u 27

Qatar: the Dolphin project multi-phasegas treatment plant at Ras Laffan

o

Conditions in the oil market remained globally favora-ble in 2006. Crude oil prices, on average, increasedcompared to 2005, driven by robust demand andsustained production capacity utilization rates.

Adjusted net operating income for the Upstream segment was 8,709 M€ compared to 8,029 M€

in 2005, an increase of 8%.

Expressed in dollars, 2006 adjusted net operatingincome for the Upstream segment was $10.9 billion,an increase of $0.9 billion compared to 2005, composed mainly of the $2.5 billion positive effect ofhigher hydrocarbon prices, which was partially offsetby the negative impact of lower production volumesand changes in the portfolio (approx -$0.6 billion),higher production costs (approx -$0.5 billion, including -$0.2 billion for exploration) and the impactof changes in tax terms (approximately -$0.5 billion).

I EXPLORATION &PRODUCTION

Exploration and developmentTOTAL’s Upstream segment intends to continue to combine long-term growth and profitability at the levels of the best in the industry.

TOTAL continued to follow an active exploration program in 2006,with exploration investments of consolidated subsidiaries amoun-ting to 1,214 M€. The principal exploration investments weremade in Nigeria, the United Kingdom, Angola, the United States,Libya, Venezuela, Norway, Algeria, Congo, Kazakhstan, Canada,Indonesia, Australia, Argentina, Cameroon, Mauritania, Gabon,China, Azerbaijan and Thailand.

The development expenditures of the Group’s consolidatedExploration & Production subsidiaries amounted to 6.0 B€in 2006, (including a share in the Ichthys project in Australia) prima-rily in Norway, Angola, Nigeria, Kazakhstan, Indonesia,Congo, Yemen, Qatar, the United Kingdom, Canada, Australia, the United States, Venezuela, Azerbaijan and Gabon.

Reserves (a)

Proved reserves calculated according to SEC rules were 11,120Mboe as of December 31, 2006, representing close to 13 years ofproduction at the current rate.

At year-end 2006, TOTAL had a solid and diversified portfolio ofproved plus probable reserves representing 20.5 Bboe, or morethan 23 years of production at the current rate (b).

Proved reserves are the estimated quantities of TOTAL’s entitlementunder concession contracts, production sharing contracts or buy-back agreements.

Canada: studying seismic survey maps

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Nigeria: an operator on an Akogep oil andgas production platform

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(b) Limited to proved and probable reserves covered by E&P contracts on fields that havebeen drilled and for which technical studies have demonstrated economic development ina 40 $/b Brent environment, including the portion of heavy oil in the Joslyn field developedby mining.

(a) For further information, please consult TOTAL’s “Registration Document 2006”, which is available in print or by accessing in the Group’s web sitewww.total.com

Liquids represented approximately 59% of these reserves and natural gas the remaining 41%. These reserves are located primarilyin Europe (Norway, the United Kingdom, the Netherlands, Italy andFrance), Africa (Nigeria, Angola, Congo, Gabon, Libya, Algeria andCameroon), Asia/Far East (Indonesia, Myanmar, Thailand andBrunei), North America (Canada and the United States), the MiddleEast (United Arab Emirates, Qatar, Yemen, Oman, Iran and Syria),South America (Venezuela, Argentina, Bolivia, Trinidad & Tobagoand Colombia), and the CIS (Kazakhstan, Azerbaijan and Russia).

ProductionFor the full year 2006, hydrocarbon average daily production was2,356 kboe/d compared to 2,489 kboe/d in 2005, a decrease of5% due to the following elements : -2% due to the price effect, -1% due to changes in the portfolio and -2% due to shut-downsin the Niger Delta area. Excluding these items, the positive impactof new field start-ups was offset by normal declines and shut-downs in the North Sea. In 2004, average production amounted to2,585 kboe/d. Liquids accounted for approximately 64% andnatural gas accounted for approximately 36% of TOTAL’s combi-ned liquids and natural gas production in 2006 on an oil equivalentbasis.

The table on the next page sets forth by geographic area TOTAL’saverage daily production of crude oil and natural gas for each ofthe last three years.

Consistent with industry practice, TOTAL often holds a percentageinterest in its acreage rather than a 100% interest, with the balancebeing held by joint venture partners (which may include other inter-national oil companies, state oil companies or government entities). TOTAL frequently acts as operator (the party responsiblefor technical production) on acreage in which it holds an interest.

As in 2005 and 2004, substantially all of the crude oil productionfrom TOTAL’s Exploration & Production activities in 2006 was marketed by the Trading-Shipping activities of its Downstreamsegment.

Main activitiesAfricaTOTAL has been present in Africa since 1928. Its exploration andproduction operations are primarily located in the countries borde-ring the Gulf of Guinea and in North Africa. Highlights of 2006included:• in Angola, first oil of the Dalia project on Block 17, with a plan-

ned production capacity (a) of 240 kboe/d, as well as the start-upof the Benguela Belize Lobito Tomboco and Landana Northfields on Block 14;

• and, in Nigeria, taking interests in the Brass LNG liquefied naturalgas project as well as in offshore Blocks OML 112 and OML 117.

TOTAL’s production in Africa averaged 720 kboe/d in 2006 (inclu-ding its share in the production of equity affiliates), making TOTALone of the leading international oil companies, based on produc-tion, in the region. Projects in Africa accounted for 31% of theGroup’s total production in 2006.

AlgeriaThe Group has been present in Algeria since 1952. Its productioncomes from the Hamra (100%) and Tin Fouyé Tabankort (TFT)(35%) fields, as well as, through the Group’s 48.83% interest inCEPSA, from the Ourhoud and Rhourde El Khrouf (RKF) fields.TOTAL’s share of production amounted to 80 kboe/d in 2006.

AngolaTOTAL has been present in Angola since 1953 and is currently oneof the most prominent oil companies in the country.

The Group has onshore, deep-offshore and ultra-deep-offshoreinterests through six production permits (three operated: Blocks 17,3, and FS/FST; three non-operated: Blocks 0, 14, and 2) and threeexploration permits (Block 32, operator; and Blocks 31 and 33).

The Group’s production comes principally from Block 17 (40%, operator), Block 0 (10%) and Block 14 (20%). On Block 17, Daliabegan production in December 2006 and is expected to reach aproduction plateau of 240 kboe/d. On Block 14, the Benguela BelizeLobito Tomboco (BBLT) platform began production in January 2006.20 discoveries have been made on Blocks 31 and 32.

TOTAL’s production in Angola (including its share in the productionof equity affiliates) reached 117 kboe/d in 2006.

Deep-offshore Block 17 is TOTAL’s principal producing asset inAngola. It is composed of four major production zones: Girassol,which has been in production since December 2001, Dalia, whichhas been in production since December 2006, Pazflor, wheredevelopment studies are underway, and CLOV, which is based onthe Cravo, Lirio, Orquidea, and Violeta discoveries. The “stand-alone” development design for CLOV is being studied after thesuccessful drilling of the Orquidea-2 well in the summer of 2006.

On the Girassol structure, production (a) from the Girassol andJasmim fields reached 210 kb/d on average in 2006, despite theplanned maintenance of the FPSO (Floating Production, Storageand Offloading) facility, which occurs every five years.

On the second production zone, Dalia field began production in December 2006. This development was launched in 2003 andis based on a system of sub-sea wells connected to a new FPSOfacility with a production capacity of 240 kb/d.

Angola: the Dalia FPSO in the deepoffshore

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28 o TOTAL IN 2006

(a) In 100 %.

UPSTREAM / EXPLORATION & PRODUCTION u 29

Production by geographic area

2006 2005 2004

Natural Natural NaturalLiquids Gas Total Liquids Gas Total Liquids Gas Total

Consolidated subsidiaries (kb/d) (Mcf/d) (kboe/d) (kb/d) (Mcf/d) (kboe/d) (kb/d) (Mcf/d) (kboe/d)

Africa 603 479 694 672 418 751 693 440 776

Algeria 35 129 59 38 141 64 42 160 72

Angola 108 24 112 144 23 148 159 27 164

Cameroon 13 2 13 12 2 12 13 - 13

Congo 93 22 97 91 20 95 87 21 90

Gabon 82 27 87 94 26 98 99 27 104

Libya 84 - 84 84 - 84 62 - 62

Nigeria 188 275 242 209 206 250 231 205 271

North America 7 47 16 9 174 41 16 241 61

Canada 1 - 1 < 1 - < 1 - - -

United States 6 47 15 9 174 41 16 241 61

South America 119 598 226 143 586 247 128 474 213

Argentina 11 375 78 11 351 74 11 325 70

Bolivia 3 97 21 3 97 21 3 82 18

Colombia 13 43 22 19 38 26 24 32 30

Trinidad & Tobago 9 2 9 12 2 13 - - -

Venezuela 83 81 96 98 98 113 90 35 95

Asia/Far East 29 1,282 253 29 1,254 248 31 1,224 245

Brunei 3 65 15 3 54 13 3 58 14

Indonesia 20 891 182 20 890 182 22 854 177

Myanmar - 121 15 - 109 13 - 110 14

Thailand 6 205 41 6 201 40 6 202 40

CIS 7 2 8 8 2 9 9 - 9

Azerbaijan < 1 < 1 < 1 - - - - - -

Russia 7 2 8 8 2 9 9 - 9

Europe 365 1,970 728 390 2,063 770 424 2,218 832

France 6 124 30 7 117 29 9 143 35

Netherlands 1 247 44 1 283 51 1 330 59

Norway 237 726 372 247 734 383 263 775 406

United Kingdom 121 873 282 135 929 307 151 970 332

Middle East 88 11 90 98 28 103 110 39 117

United Arab Emirates (U.A.E.) 14 6 15 14 7 16 16 6 17

Iran 20 - 20 23 - 23 26 - 26

Qatar 29 3 29 31 3 31 31 1 31

Syria 16 2 17 22 18 25 30 32 36

Yemen 9 - 9 8 - 8 7 - 7

Total consolidated production 1,218 4,389 2,015 1,349 4,525 2,169 1,411 4,636 2,253

Equity and non-consolidatedaffiliates

Africa (a) 25 4 25 24 4 25 37 4 37

Middle East (b) 263 281 316 248 251 295 247 254 295

Total equity and non-consolidated affiliates 288 285 341 272 255 320 284 258 332

Worldwide production 1,506 4,674 2,356 1,621 4,780 2,489 1,695 4,894 2,585

(a) Primarily attributable to TOTAL’s share of CEPSA’s production in Algeria.(b) Primarily attributable to TOTAL’s share of production from concessions in the U.A.E.

30 o TOTAL IN 2006

Basic engineering studies for the development of Pazflor, the thirdproduction zone made up of the Perpetua, Zinia, Hortensia, andAcacia fields in the eastern portion of Block 17, continued in 2006.These studies plan for the development, scheduled to begin in2007, of a FPSO facility with a production capacity of 200 kb/d.

The successful Orquidea-2 appraisal well confirmed the Group’sinterest in developing the Cravo, Lirio, Orquidea and Violeta fields,through a fourth FPSO facility on Block 17. Basic engineering studies for the development of this new production zone (CLOV)should be launched in 2007.

On Block 14 (20%), production increased significantly with thestart-ups of Benguela Belize (January 2006), and Lobito andLandana North (June 2006). Production should continue toincrease through the ramp-up of production of BBLT and the start-up of production at Tombua Landana (scheduled for 2009). The Lucapa discovery made in November 2006 added to theGroup’s estimate of the Block’s potential resources.

CameroonTOTAL has been present in Cameroon since 1951. TOTAL’s shareof production amounted to 13 kb/d in 2006.

In March 2006, TOTAL signed an exploration and production sha-ring contract for the Bomana block (100%). In April 2006, the Groupsigned renewals for three operated concessions, Bavo-Asoma,Kita-Edem and Sandy Gas, for a 25-year period and at the sametime renewed its non-operated concession for Mokoko-Abana.Blocks PH 60 (50%, operator) and PH 59 (50%) were relinquishedin August 2006, when these concessions reached their term.

CongoTOTAL, the largest operator of production in Congo, has been present in the country since 1928. TOTAL’s share of production,primarily offshore, reached 97 kboe/d in 2006, compared to 95kboe/d in 2005 and 90 kboe/d in 2004. Highlights for 2006 included discoveries on the Mer Très Profonde Sud (MTPS, 40%, operator) and the Moho-Bilondo (53.5%, operator) permits. The first phase of development for the Moho-Bilondo project waslaunched in 2005.

TOTAL holds interests in several exploration and productionpermits. The principal producing fields that it operates areNkossa (53.5%), Tchibouela (65%), Kombi-Likalala-Libondo(65%) and Tchibeli-Litanzi-Loussima (65%).

The Moho-Bilondo project is under development, with productionexpected to begin in the first half 2008. The production plateau is expected to reach 90 kb/d.

GabonTotal Gabon is one of the Group’s oldest subsidiaries in sub-Saharan Africa. The Group’s share of production in 2006 was 87 kboe/d.

Total Gabon is a Gabonese company whose shares are listed onEurolist by Euronext Paris. TOTAL holds 58%, the Republic ofGabon 25% and the public float 17%.

In 2006, Total Gabon signed an exploration and production sharingcontract for a new deep-offshore permit, Diaba, covering an areaof 9,075 km2 off the southern coast of Gabon. Under this agree-ment, Total Gabon has an 85% interest in the permit while theRepublic of Gabon has the remaining 15%.

LibyaThe Group’s share of production in 2006 reached 84 kboe/d.Production comes from the Mabruk field (75%, operator), offshoreBlock C 137 (75% (a), operator), and Block NC 186 (24% (a)) and NC115 (30% (a)). In the Murzuk Basin in 2006, the Group made a discovery on Block NC 191 (100%, operator).On Block NC 186, the Group is continuing to develop several previously discovered structures.

MauritaniaThe Group has conducted exploration and production activities in Mauritania since 2003. In January 2005, TOTAL signed two production sharing contracts with the Mauritanian government foronshore Blocks Ta7 and Ta8 in the Taoudenni Basin, representinga combined total of 58,000 km2. Following an aerial survey toobtain magnetic and gravimetric data performed in 2005 and2006, a 3,000 km 2D seismic campaign was launched in July2006 for an expected duration of fifteen to eighteen months.

NigeriaTOTAL has been present in Nigeria since 1962. It operates six production permits (OML) out of the 43 in which it holds an inte-rest, and five exploration permits (OPL) out of six in which it has an interest. The Group’s share of production reached 242 kboe/din 2006.

The fields operated by TOTAL, OML 58, 100, 102 (40%, operator)and OML 99 - Amenam (30.4%, operator), contributed approxima-tely 60% of the Group’s Nigerian in 2006. TOTAL’s production also

Congo: the Djeno terminal

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(a) Participation in the foreign consortium.

UPSTREAM / EXPLORATION & PRODUCTION u 31

comes from its interests in SPDC, in the Ekanga field (40%), and inthe Bonga field (12.5%), where production started in November 2005and reached its plateau production of 210 kboe/d early in 2006.

The Group’s appraisal of the Egina field (OML 130), which beganin 2004, continued from 2005 through 2007 with the drilling of oneexploration well and three appraisal wells. In 2007, the Groupannounced that the Egina field was expected to be developed ona stand-alone basis.Within the framework of the joint venture between NNPC (NigerianNational Petroleum Corporation) and TOTAL, the authoritiesapproved the “OML 58 Upgrade” development plan in July 2006.This new project is expected to begin operations in 2009 and tosupply Nigeria LNG’s (NLNG) sixth liquefaction train.After evaluating the bids it had received, late in 2006 the Groupgave its final approval for a new development project (Ofon II) onthe OML 102 permit. The Nigerian authorities had previouslyapproved the development of this project in 2005. This new phase,whose launch is scheduled for 2009, is expected to produce anadditional 70 kboe/d (in 100%). TOTAL also continued to developthe Amenam Phase II project in 2005 and 2006. This project,which produces associated gas from the Amenam field to supplyNLNG, entered into operation late in 2006.

TOTAL is also actively pursuing development work on its deepoffshore discoveries. Development of the Akpo field on OML 130(24%, operator) is continuing. The principal engineering andconstruction contracts for the development of Akpo, which weresigned in 2005, are currently being executed, with a goal of reaching a production plateau of 225 kboe/d (in 100%).Production on the Akpo project is expected to begin late in 2008.

TOTAL holds a 15% interest in the NLNG gas liquefaction plant. At this plant, a fourth train came on line in November 2005, followed by a fifth train which began operations in February 2006.In 2004, NLNG’s shareholders decided to invest in a sixth train,which is scheduled to be commissioned in 2007. The companybegan studies for a seventh train, with a capacity of 8.5 Mt, in July2005, which continued in 2006.

In 2006, TOTAL acquired a 17% interest in the Brass LNG project,which plans to build two trains, each with a capacity of 5 Mt/year.The Group also agreed to supply approximately two thirds of thesecond train’s requirements. The final investment decision for thisproject is expected to be made in 2007.

SudanLate in 2004, TOTAL (32.5%, operator) updated its productionsharing contract for Block B (118,000 km2 in southeast Sudan).

To counter a claim by the White Nile Company, which publicly claimed to have rights to the area covered by the permit held by TOTAL and its partners, the Group sought to enforce its rights

in a British court. In May 2006, the High Court of London orderedWhite Nile to disclose the contracts upon which its claims arebased to TOTAL. This ruling was confirmed by the Court of Appealin January 2007.

North AmericaSince 2004, TOTAL has strengthened its position in Canadian oilsands by increasing its share in the Surmont permit and acquiringDeer Creek Energy Ltd. The first phase of Deer Creek Energy’sJoslyn project began production in November 2006. In November2005, TOTAL signed an agreement to exchange four mature onshore fields in South Texas for a 17% stake in the deep-offshoreTahiti field in the Gulf of Mexico, which is scheduled to begin production in mid-2008. In 2006, two successful wells were drilledon the Alaminos Canyon 856 permit. Production for the year 2006 amounted to 16 kboe/d, less than 1% of the Group’s totalproduction.

CanadaIn Canada, the Group is participating in oil sands projects inAthabasca, Alberta. The Surmont (50%) and Joslyn permits are itsprincipal assets. Deer Creek Energy Ltd, acquired in 2005, opera-tes the Joslyn permit, with an 84% interest.

In 1999, TOTAL began participating in a pilot project on theSurmont permit in Athabasca to extract bitumen using SteamAssisted Gravity Drainage (SAGD). Engineering and constructionactivities are ongoing. Production is expected to begin in the sum-mer of 2007.

In 2005, TOTAL acquired 83% of Deer Creek Energy Ltd whichholds 84% of the Joslyn permit, through a public tender launchedin August. The Joslyn permit, located approximately 140 km northof Surmont, will principally (approximately 90%) be developedusing mining techniques. This permit is expected to be developedin several phases. The first phase, using SAGD, began productionin November 2006. The mining development phases are schedu-led to begin in 2013, with a planned initial production plateau of100 kb/d anticipated to be increased to 200 kb/d in a subsequentphase.

In January 2006, TOTAL acquired 100% of the OSP 674 permit,and in September 2006, it acquired 100% of the OSL 457 (loca-ted near the OSP 674 permit) and OSL 841 permits (located 30km north of the OSL 354 permit).

Nigeria: an Akogep oil and gasproduction platform

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Canada: exploiting theSurmont tar sands

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32 o TOTAL IN 2006

MexicoTOTAL is conducting various studies in cooperation with Mexico’sstate-owned PEMEX under a technical cooperation agreementsigned in December 2003.

United StatesTOTAL has been present in the United States since 1957. In 2006,the Group’s production decreased to 15 kboe/d. Production in2006 came principally from three deep-offshore fields in the Gulf ofMexico: Virgo (64%, operator), Aconcagua (50%, operator) andMatterhorn (100%, operator).

Production from these fields was affected by Hurricane Katrina in2005. Production on Matterhorn was shut down from August2005 to August 2006 and production on Virgo was shut downfrom August 2005 to May 2006.

In February 2006, the Group signed and closed an agreement tosell two mature fields, Bethany and Maben, located, respectively,in eastern Texas and in Mississippi.

In August 2006, TOTAL increased its interest in the Chinook project from 15% to 33.33%. Development plans for this projectare currently being discussed.

In December 2006, TOTAL signed an agreement to sell its interests in the Aconcagua and Camden Hills fields, as well as itsinterest in the Canyon Express System (25.8%, operator). Thistransaction closed in January 2007.

In 2006, two successful wells were drilled on the Alaminos Canyon856 permit (70%, operator), confirming the extension of the GreatWhite field.

In 2006, TOTAL was also awarded 27 new deep-offshore blocks(Keathley and Garden Banks) after bidding in Louisiana and Texas.

South AmericaThe Group’s production in South America in 2006 amounted to226 kboe/d, which accounted for approximately 10% of theGroup’s overall production. The Group is involved in ongoing discussions with Venezuelan authorities regarding legal and taxchanges in the country. TOTAL’s acquisition of a 49% interest in the offshore exploration Block 4 of the Plataforma Deltana wasformally approved by the Venezuelan authorities in January 2006.In Colombia in 2006, the Group agreed to acquire 50% of the Niscota exploration block. In Bolivia, TOTAL signed new explo-

ration-production contracts with the Bolivian government andincreased its interest in Block XX West (operator) to 75%.

ArgentinaTOTAL has been present in Argentina since 1978 and operatesapproximately 25% of the country’s gas production. In 2006,TOTAL produced 78 kboe/d, a 5% increase compared to 2005 (74 kboe/d).

TOTAL holds interests in Argentina’s two major basins: Neuquen(the San Roque and Aguada Pichana fields) and Tierra del Fuego(notably Carina and Canadon-Alfa).

On the San Roque field (24.7%, operator), a medium-pressurecompression project launched in 2003 was commissioned inAugust 2006. The development of the Rincon Chico North disco-very and the low-pressure compression project were launched inJanuary 2006, with production scheduled to begin in February2008 and May 2008 respectively. These projects are expected to extend the field’s production plateau.

BoliviaTOTAL holds six permits in Bolivia: San Alberto and San Antonio,both in production (15%) and four permits in the exploration orappraisal phase: Blocks XX West (75%, operator), Aquio and Ipati(80%, operator) and Rio Hondo (50%). In October 2006, TOTALacquired an additional 34% of Block XX West, adding to the 41%interest it already held.

In 2006, the Group’s production remained stable at 21 kboe/d.

Pursuant to the decree of May 1, 2006 regarding the nationaliza-tion of hydrocarbons, TOTAL signed six new exploration and pro-duction contracts in October 2006 for all blocks in which it has aninterest. Although these contracts were approved by the Bolivianlegislature on December 3, 2006, they will not become effectiveuntil an additional legislative ratification has been completed. The new contracts retain certain terms from production sharingagreements while providing for a 50% production tax and profitsharing between YPFB (Yacimientos Petroliferos FiscalesBolivianos, the state-owned Bolivian oil company) and the foreignpartner, after reimbursement of investments and costs.

BrazilIn 2005, TOTAL increased its interest in the Curio discovery zone onBlock BC2 from 35% to 41.2%.

Argentina: a gas compression and crudeoil treatment plant at Aguada Pichana

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UPSTREAM / EXPLORATION & PRODUCTION u 33

ColombiaTOTAL holds a 19% interest in the Cusiana and Cupiagua fields,where the Group’s share of production reached 22 kboe/d in 2006.

In order to renew the Group’s exploration acreage in Colombia,TOTAL relinquished the Tangara permit late in 2006. An agreementto acquire 50% of the Niscota exploration block was concluded inSeptember 2006.

Trinidad & TobagoTOTAL holds a 30% interest in Block 2C (Grand Angostura field)where production amounted to 9 kboe/d in 2006, compared to 13 kboe/d in 2005. TOTAL also has an 8.5% share in the adjacentBlock 3A, where an oil discovery (Ruby-1) was under evaluationearly in 2007.

VenezuelaTOTAL has been present in Venezuela since 1980 and is one of themain partners of PDVSA (Petróleos de Venezuela S.A.), a state-owned company, in particular for oil production in the OrinocoBasin.

The Group holds interests in the Sincor (47%) and Yucal Placer(69.5%) projects as well as in the offshore exploration Block 4 ofthe Plataforma Deltana (49%). TOTAL’s average productionamounted to 96 kboe/d in 2006.

On March 31, 2006, the Venezuelan government terminated all operating contracts signed in the nineteen-nineties and decidedto transfer the management of fields concerned to new mixedcompanies to be created with the state-owned company PDVSA(Petroleos de Venezuela S.A.) as the majority owner. The govern-ment and the Group did not reach an agreement on the terms ofthe transfer of the Jusepin field under the initial timetable. However,subsequent negotiations have led to a settlement, announced inMarch 2007, under which the government has committed to paythe Group $ 137.5 million.

Asia/Far East – PacificIn 2006, TOTAL’s production in Asia/Far East, principally fromIndonesia, amounted to 253 kboe/d, compared to 248 kboe/d in2005 and 245 kboe/d in 2004, an increase of 2% over the period.Asia/Far East represented 11% of the Group’s overall production forthe year 2006. Highlights for the 2004 to 2006 period included theacquisition of interests in several exploration permits in Australia,Bangladesh and Indonesia, the acquisition of a 24% interest in the Ichthys LNG project in Australia in partnership with INPEX, andthe signature of an agreement with China National PetroleumCorporation for the appraisal, development and production of natural gas on the Sulige South block in China.

AustraliaIn 2006 TOTAL increased its offshore interests in both explorationand development of previously discovered fields in northwestAustralia.

In February 2006 with the same partners as for Block WA-269P(30%), TOTAL acquired a 30% share in the two adjacent blocks,WA-369P and WA-370P, located in the Carnarvon basin near thePluto field. A 3D seismic campaign on these blocks was comple-ted in 2006 and four wells are scheduled to be drilled in 2007 and2008.

Also in 2006, TOTAL acquired a 25% share in adjacent blocks,WA-301P, WA-303P, WA-304P, and WA-305P, located in theBrowse basin. A well is scheduled to be drilled on Block WA-303Pin 2007.

In addition, in August 2006 TOTAL acquired a 24% interest inBlock WA-285P, also in the Browse basin. The Ichthys gas andcondensates field, in the same basin, has already had six success-ful wells drilled since 2000. This field is expected to be developedto produce an estimated 6 Mt/y to 10 Mt/y of LNG, condensatesand liquefied petroleum gas (LPG). In 2006, this project receivedthe Major Project Facilitation Status, which should contribute to obtaining governmental approvals, expected in 2008. The envi-ronmental evaluation of the development scheme was launched in May 2006, and exploration and appraisal drilling are planned for2007.

In January 2007, TOTAL acquired an 80% interest, as operator, for the lower levels of Block AC/P-37. A seismic campaign is sche-duled for 2007.

BangladeshLate in 2005, TOTAL signed an agreement to acquire 60% of twooffshore exploration blocks, 17 and 18, located southeast ofBangladesh. The government approved this agreement on March14, 2007.

BruneiTOTAL is the operator of the Maharaja Lela Jamalulalam field, loca-ted offshore on Block B of Brunei Darussalam (37.5%, operator).The Group’s share of production amounted to 15 kboe/d in 2006,compared to 13 kboe/d in 2005 and 14 kboe/d in 2004. Aftercompleting studies in 2006, TOTAL is planning to drill severalexploration wells on this block in 2007.

TOTAL is also the operator of deep-offshore exploration Block J(60%), for which a production sharing contract was signed inMarch 2003. Exploration operations on the 5,000 km2 block havebeen suspended since May 2003 due to a border dispute withMalaysia.

Venezuela: the Sincor project

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34 o TOTAL IN 2006

ChinaEarly in 2006, TOTAL and China National Petroleum Corporationsigned a production sharing contract for the appraisal, develop-ment, and production of natural gas resources on the South Suligeblock covering an area of approximately 2,390 km2 in the OrdosBasin in the Inner Mongolia province.The agreement was approved by the Chinese authorities andbecame effective in May 2006. The appraisal work outlined in thecontract (seismic acquisition, well testing) began in September2006.

IndonesiaTOTAL has been present in Indonesia since 1968. Indonesia repre-sented 8% of the Group’s production in 2006, amounting to 182kboe/d. TOTAL operates two offshore blocks in the EastKalimantan zone, the Mahakam permit (50%, operator), and theTengah permit (22.5%).

TOTAL’s operations in Indonesia are primarily concentrated on theMahakam permit, which covers several fields including Peciko andTunu, the largest gas fields in the East Kalimantan zone.

TOTAL delivers its natural gas production to PT Badak, theIndonesian company that operates the Bontang LNG plant. Theoverall capacity of the eight liquefaction trains of the Bontang plantis 22 Mt/y, one of the largest in the world (a). The LNG produced isprimarily sold under long-term contracts with Japanese, SouthKorean and Taiwanese purchasers that mainly use it for powergeneration. In 2006, the production operated by TOTAL on theMahakam permit amounted to 2,648 Mcf/d, and the gas deliveredby TOTAL to Bontang accounted for more than 70% of the plant’ssupply.

In 2006, TOTAL acquired a 49% share in the offshore EastSepanjang block, located northeast of the island of Java. A seis-mic acquisition campaign is scheduled and an exploration well is expected to be drilled.

Late in 2006, a gas discovery, Tunu Great South-1, was made between the Tunu and Peciko fields on the Mahakam permit.

On the neighboring Tunu field, the tenth phase of development is underway and four additional platforms became operational in 2006. The eleventh development phase, to install onshore com-pression units, was launched in 2005 and is continuing. A new phase for drilling additional wells was agreed upon late in2006.

The project to extend the Tambora field, launched in 2004, advan-ced with the commissioning of three new platforms by mid-2006.

Phase 1 of the new Sisi-Nubi offshore development was launchedin 2005 and is ongoing. Gas from Sisi-Nubi is expected to be produced early in 2008 through existing processing facilities.

MalaysiaSince 2001, TOTAL has held a 42.5% interest in the deep offshoreBlock SKF permit. After drilling an exploration well in 2004, TOTALreevaluated the exploration potential of the permit and requestedan extension of the exploration period to carry out additional work,which was obtained in March 2007.

MyanmarTOTAL is the operator of the Yadana field (31.2%). The Group’sshare of production was 15 kboe/d in 2006. This field, located on offshore Blocks M5 and M6, produces natural gas, which is principally delivered to PTT (Thailand’s state-owned company)and used in Thai power plants.

ThailandThe Group’s primary asset in Thailand is the Bongkot gas andcondensates field (33.3%), where its production reached 41 kboe/d in 2006. PTT (Thailand’s state-owned company) pur-chases all the condensates and natural gas produced.

Production from phase 3E, launched early in 2005 to create threewell platforms, began mid-February 2007. A new developmentphase, 3F, for three new well platforms was launched early in 2006and production from this development phase is expected to beginmid-2008.

Early in 2007, three new gas discoveries, Ton Chan-1X, Ton Chan-2X and Ton Rang-2X on Blocks 15 and 16 of the Bongkotfield confirmed the Group’s interest in this concession. The deve-lopment plan for these three new discoveries is being prepared,with production anticipated for as early as 2009.

Commonwealth of Independent States(CIS)TOTAL’s production for 2006 was 8 kboe/d, accounting for 0.3%of the Group’s overall production. Highlights for 2006 included the start-up of the Shah Deniz project in Azerbaijan.

(a) Source : Wood MacKenzie, Deutsche Bank.

Indonesia: the Peciko gas treatmentcenter

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AzerbaijanTOTAL’s presence in Azerbaijan dates back to 1996 and is cente-red on the Shah Deniz field (10%). After phase 1 of developmentof this gas and condensate field was launched in 2003, productionfrom the first well began in December 2006. The first gas sales to Azerbaijan were made late in 2006.

The South Caucasus Pipeline Company (SCPC), in which TOTALholds a 10% interest, completed the construction of a gas pipelineto transport gas from Shah Deniz to the Turkish and Georgian markets. This gas pipeline was gradually brought onstream andbecame operational in November 2006.

Construction of the 1,770 km BTC (Baku-Tbilissi-Ceyhan) oil pipeline, with an operating capacity of 1 Mb/d, began in August2002 and was completed in 2006. This pipeline, owned by BTCCo. (in which TOTAL has a 5% interest), links Baku to theMediterranean Sea. The first delivery to Ceyhan (Turkey) was madein June 2006.

KazakhstanTOTAL has been present in Kazakhstan since 1992, where it is a partner on the North Caspian Sea permit which contains the Kashagan field. TOTAL holds an 18.52% interest in this permit.

Drilling of development wells was launched in 2004 and continuedin 2005 and 2006, with production now scheduled to begin nearthe end of 2010. The size of the Kashagan field may eventuallyallow production to be increased to more than 1 Mb/d (in 100%).

The North Caspian permit includes other structures that are smal-ler than Kashagan: Aktote, Kairan, Kalamkas and KashaganSouthwest. These structures are in the appraisal phase. In 2006,two new appraisal wells were drilled on Kalamkas and Kairan. The Kalamkas-3 well was positive and the results for the Kairan 2well are being evaluated. A long-duration test is expected to starton Kairan 2 during the first half 2007.

RussiaTOTAL has been present in Russia since 1989. The Group’s prin-cipal activity is on the Kharyaga field (50%, operator) in the Nenetsterritory. The Group’s production was 8 kboe/d in 2006.

On the Kharyaga field, phase 2 of development was completed in 2005, targeting a production plateau of 30 kboe/d (in 100%). Pre-project studies for phase 3 were carried out in 2006. Late in 2005, TOTAL and the Russian Federation reached an amicableagreement to resolve a dispute over the interpretation of the pro-duction sharing agreement. As a result, the request for arbitrationin Stockholm was withdrawn. In 2006, the production sharingcontract was implemented normally, with profit oil being sharedamong the state and investors.

In 2005, TOTAL was pre-selected by Gazprom, along with fourother foreign companies, to potentially participate in the giantShtokman gas production project in the Barents Sea. In October2006, Gazprom announced that the project would not proceedunder the proposed contractual framework, since the RussianFederation no longer wished to share acreage with independent oilcompanies. Other contractual arrangements are being studied forthis project.

EuropeTOTAL’s production in Europe amounted to 728 kboe/d in 2006,representing 31% of the Group’s overall production. Highlights ofthe period from 2004 to 2006 include start-up of the Skime,Kvitebjørn and Kristin fields in Norway, an increase in the Group’sinterest in the PL211 license (Victoria), new developments on exis-ting fields (Ekofisk Area Growth, structure J and West Flank ofOseberg, and the North Flank of Valhall) and the approval by theNorwegian Parliament of the Tyrihans development plan. In theUnited Kingdom, satellites of the Alwyn (Forvie North, Nuggets N4)and Elgin-Franklin (Glenelg) facilities began production. In both theUnited Kingdom and Norway, several discoveries (including JuraWest in the United Kingdom) were made and new explorationlicenses awarded. In Italy, TOTAL signed an agreement with theBasilicate region to start developing the Tempa Rossa field.

FranceThe Group has operated fields in France since 1939, with its mostsignificant activity being the development and operation of theLacq gas field, which began in 1957.

The Group’s principal natural gas fields, Lacq (100%) and Meillon(100%), located in southwest France, and several smaller naturalgas and oil fields in the same region as well as in the Paris Basin,produced 30 kboe/d in 2006.

After conducting an initial pilot test in 2006 on the SPREX process(de-acidifying gas by using cryogenics), a pilot program for captu-ring and injecting carbon dioxide is being studied. This programwould modify a gas burning plant to operate in an oxy-combustionenvironment and the carbon dioxide produced would be re-injectedin a depleted field. This program could begin operation in 2008.

The restoration of certain sites and the re-industrialization of theLacq platform are ongoing. Construction of a bio-ethanol unit byAgengoa Bioenergy began in 2006.

ItalyThe Tempa Rossa field, discovered in 1989, is TOTAL’s principalasset. It is located on the unitized Gorgoglione concession in thesouthern Apennins, in the Basilicate region.

Kazakhstan: an artificial island on the Kashagan field

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UPSTREAM / EXPLORATION & PRODUCTION u 35

36 o TOTAL IN 2006

A preliminary agreement was reached with the Basilicate region in2004. This initial agreement was the basis for the final agreement(Accordo Quadro) signed between the Basilicate region, TOTAL, andthe other partners in September 2006. This agreement, combinedwith the approval of the development plan proposed by the Basilicateregion in May 2006 allows development of the field to begin.

In 2006, bids for the main purchasing and construction contractswere evaluated, and contracts may be awarded once the projectis approved.

NorwaySince the late sixties, the Group has played a major role in thedevelopment of a large number of fields in the Norwegian NorthSea. TOTAL holds interests in 66 production permits on theNorwegian continental shelf, ten of which it operates. Norway isthe largest contributor to the Group’s production, with an averageof 372 kboe/d in 2006.

The largest contribution to this production, for the most part non ope-rated, comes from the Ekofisk area (39.9%) in southern Norway,which accounts for approximately 45% of the Group’s production inthe country. This area is made up of four producing fields with a com-bined average production of 169 kboe/d for 2006. The Ekofisk AreaGrowth project (EAG) to install a new platform and drill a series ofwells, began in October 2005 and contributed to 2006 production.

TOTAL operates the Skirne/Byggve gas and condensates field(40%), which accounts for 3% of the Group’s production in Norway.The Frigg field (77%, operator) was shut down in October 2004after 27 years in production. TOTAL is leading a significant multi-year decommissioning and site restoration program at this site.

The Oseberg area (10%) in the central North Sea accounts forslightly more than 9% of the subsidiary’s production and consistsof several platforms and projects, including structure J, whichbegan production in June 2005, the West Flank oil field, whichbegan production in February 2006, and the Tune gas field.

The Sleipner area (West 9.4% and East 10%) including Glitne(21.8%), also in the central North Sea, represents nearly 9% of production in the country, while the Troll (3.7%) oil and gas fieldcontributes 7.5%. Among other significant non-operated produ-cing fields are those located in the Tampen area, including Snorre(6.2%) and Visund (7.7%), which started gas production inOctober 2005 (six years after oil production began). The Valhallarea (including Valhall 15.7%) and Kvitebjørn (5%) started produc-tion in October 2004.

The sub-sea development of the Vilje oil field (24.2%) and the inno-vative development of Tordis IOR (5.6%) in the Tampen area in the North Sea are underway. Production is scheduled to begin in 2007.

On the Haltenbanken area, in the Norwegian Sea, the Åsgard oilfield (7.7%) contributes 7.5% of the Group’s production and Kristin(6%), the sub-sea high-pressure/high-temperature field, beganproduction in November 2005. In February 2006, the developmentof the Tyrihans oil, gas and condensates field (23.2%) was appro-ved by the authorities. Production is scheduled to begin in 2009,with an initial estimated plateau rate of 70 kboe/d (in 100%), to bereached in 2011.

In 2006, TOTAL increased its interest in the PL211 license (in theHaltenbanken area) to 40% and became its operator. This licensecovers the Victoria discovery, which is not yet developed. The Group also disposed of a 3.3% interest in the Tyrihans field.As a result, the Group now has a 23.2% interest in this field.

In the Barents Sea, the Group is involved in the Snøhvit project,which includes the development of the Snøhvit natural gas field(18.4%) and the construction of liquefaction facilities on MelkoyaIsland. Production is expected to begin in the third quarter of 2007,with a ramp-up over several months.

TOTAL has an 8.1% interest in the Norwegian dry gas transportsystem, Gassled, after taking into account the incorporation of thenew Langeled pipeline toward the United Kingdom.

NetherlandsTOTAL has been present in the Netherlands for more than fortyyears, where it is the second largest gas operator. The Group’sshare of production amounted to 44 kboe/d in 2006.TOTAL holds 22 offshore production permits, of which 18 are operated by the Group, two operated offshore exploration permitsand one onshore exploration permit.

Several development wells were drilled over the past three years.During this period, the first phase in the reorganization of Block L7was launched, along with major maintenance work. The L4Gstructure, developed in 2005 and 2006, began production inAugust 2006. The development of structure K5F was approved,with production scheduled to begin early in 2008.

Late in 2006, the Group was awarded a new exploration permitcovering offshore block L3.

UPSTREAM / EXPLORATION & PRODUCTION u 37

United KingdomTOTAL has been present in the UK since 1962. The Group’s production amounted to 282 kboe/d in 2006. The UK contributesapproximately 12% of the Group’s oil and gas production, comingprincipally from three major zones: Alwyn, Elgin-Franklin andBruce.

The Elgin-Franklin zone, which has been in production since 2001,has made a significant contribution to the Group’s activities in theUK. This project, one of the largest investments made in the BritishNorth Sea in the past twenty years, constituted a technical miles-tone, combining the development of the deepest reservoirs in theNorth Sea (5,500 m) with temperature and pressure conditionsamong the highest in the world.

In 2007, TOTAL obtained two permits as operator (Blocks 206/3and 206/4, 36%) west of the Shetland Islands and another permit(Block 3/8f, 100%) north of Dunbar from the 24th licensing roundlaunched by the UK Department of Trade and Industry.

In 2005, TOTAL acquired the right to obtain a 25% interest in twozones located near Elgin-Franklin by drilling an appraisal well onthe Kessog structure. Drilling began near the end of 2006.Depending on the results of this appraisal well, TOTAL has anoption to increase its interest in these zones (Blocks 30/1b and30/1c) to 50%.

TOTAL disposed of its share in Peik (PL088), which is partially located in Norway, in the first quarter 2007.

Work on the multi-year program to decommission the Frigg facili-ties and restore the site continues.

The Forvie Central well discovered small oil and gas columns. The Jura West well (Block 3/15) discovered gas on more than 300meters of Brent quality reservoirs and is believed to be a significantdiscovery. This well is expected to be connected to the ForvieNorth sub-sea collector, which is connected to the NAB proces-sing platform on the Alwyn North field. Production is expected to begin in 2008.

Late in 2005, the British government decided to increase the Supplementary Corporation Tax on oil and gas operations. As a result, the Corporation Tax increased from 40% to 50%. For fields subject to the Petroleum Revenue Tax, the overall taxburden increased from 70% to 75%. This tax increase, which wasadopted mid-2006, became effective at the beginning of 2006

Middle EastTOTAL has been developing long-term partnerships in the MiddleEast for eighty years. TOTAL’s 2006 share of production in theMiddle East (including the production of equity affiliates andunconsolidated subsidiaries) increased by 2% compared to 2005,primarily due to the increase in production from the United ArabEmirates. It reached 406 kboe/d in 2006 (representing 17% of theGroup’s overall production). Between 2003 and 2006, TOTAL hasdeveloped its LNG activities, launching the Yemen LNG projectand acquiring an interest in the Qatargas II project.

Saudi ArabiaTOTAL has a 30% interest in a joint venture with state-owned SaudiAramco for natural gas exploration in a 200,000 km2 area in southernRub Al-Khali. An initial five-year period of work began in January2004. A 137,800 km2 gravimetric survey was performed in 2004. An 18,250 km 2D seismic campaign, launched in 2004 on the samesite, continued in 2005 before being completed late in 2006.

United Arab EmiratesTOTAL’s activities in the United Arab Emirates are located in AbuDhabi and Dubai, where the Group’s presence dates back to 1939and 1954, respectively. TOTAL’s production in 2006 reached 267 kboe/d.

In Abu Dhabi, TOTAL holds a 75% interest (operator) in the Abu AlBu Khoosh field. TOTAL is also a 9.5% shareholder in the AbuDhabi Company for Onshore Oil Operations (ADCO), which opera-tes the Asab, Bab, Bu Hasa, Sahil and Shah onshore fields, as wellas a 13.3% shareholder in Abu Dhabi Marine (ADMA), which operates the Umm Shaif and Lower Zakum offshore fields.

TOTAL holds a 15% interest in Abu Dhabi Gas Industries(GASCO), a company that produces butane, propane, andcondensates from the associated gases produced by onshorefields. TOTAL also holds 5% of the Abu Dhabi Gas LiquefactionCompany (ADGAS), a company that produces LNG, LPG, andcondensates from the natural gas produced by offshore fields.

The Group also has a 33.3% interest in Ruwais Fertilizer Industries(FERTIL), which produces ammonia and urea from methane supplied by the Abu Dhabi National Oil Company (ADNOC).

In Dubai, TOTAL holds a 27.5% interest in the Fateh, Falah andRashid fields through the combination of its 50% interest in DubaiMarine Areas Limited (DUMA, which holds 50% of the concessionoffshore Dubai), and its 2.5% interest held directly by Total E&P

Scotland: producing the Elgin-Franklin field

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North Sea: a production and treatmentplatform on the Ekofisk field

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United Kingdom: a control-room operator ona platform on the Elgin field

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38 o TOTAL IN 2006

Dubai. An agreement was reached to relinquish this concession atthe beginning of April 2007.

TOTAL is also a shareholder (24.5%) in Dolphin Energy Limited,which is expected, in the summer of 2007, to begin the UnitedArab Emirates marketing of the natural gas produced by theDolphin project in Qatar. Natural gas sales agreements for this project were signed in 2003 and 2005, and the Qatari authoritiesapproved the final development plan in December 2003.

Iran TOTAL signed the first buyback contract for the development ofthe Sirri A&E fields in 1995. The Group’s production amounted to20 kb/d in 2006. Its share of production comes from four buybackcontracts, on the Sirri, South Pars, Balal, and Dorood fields.

The Sirri A&E fields (60% interest in foreign consortium) have beenoperated by the state-owned National Iranian Oil Company (NIOC)since 2001.

Average production (in 100%) from phases 2 and 3 of the offshoreSouth Pars gas and condensate field (40% interest in foreignconsortium) was slightly less than 2,000 Mcf/d and 90 kboe/d in 2006, due to major maintenance work that began in 2005,continued in 2006 and is now complete. Production operationshave been conducted by NIOC since 2004.

The development of the Balal offshore oil field (through a 46.8%interest in a foreign consortium) was completed, and the facilitieswere transferred to NIOC in 2004.

The development of the Dorood field (through a 55% interest in a foreign consortium) is nearly completed, with the additionaladjustment work needed following start-up underway.

In 2004, TOTAL signed several agreements with its partners crea-ting the framework for the Pars LNG liquefied natural gas futureproject and its principal commercial terms. These agreements out-line the relationship between the Pars LNG plant (40%), in chargeof the liquefaction activities, and Block 11 of South Pars (80%),expected to supply gas to the liquefaction plant. The project callsfor the initial construction of two trains, each with a capacity of 5 Mt/y of LNG, to be followed by the construction of a third trainwith the same capacity. It is expected that the purchasers of LNGfrom the project will also become partners in the project.

Pursuant to the agreed framework, engineering studies for the natural gas liquefaction plant and the development of Block

11 of South Pars were launched in 2005 and the bidding processto award the principal supply and construction contracts began in July 2006.

KuwaitSince 1997, the Group has been providing technical assistance forthe upstream activities of state-owned Kuwait Oil Company (KOC)under an agreement renewed late in 2006.

The Group also holds a 20% interest in the consortium formed to participate in the bidding process opened to international oil companies for production activities on oil fields in northern Kuwait.

OmanTOTAL is present in Oman on Blocks 6 and 53, and in the OmanLNG/Qalhat LNG gas liquefaction plant. Production averaged 35kboe/d in 2006.

On Block 6, operated by Petroleum Development Oman (PDO), in which TOTAL holds a 4% interest, oil production in 100% averaged 589 kb/d in 2006, down from 631 kb/d in 2005.

Development of the Mukhaizna heavy oil field on Block 53 (2%)was launched in 2006 pursuant to the production sharing contractsigned in 2005. Production for 2006 averaged 9.5 kb/d in 100%.

The two liquefaction trains of Oman LNG (5.54%) produced 6.7 Mtin 2006. The third liquefaction train, commissioned late in 2005and owned by a new company, Qalhat LNG, produced 2.2 Mt in 2006 (2.04%, Group interest through Oman LNG).

QatarTOTAL has been present in Qatar since 1936 and holds interests in the Al Khalij field, the North field, the Dolphin project, theQatargas I liquefaction plant and the second train of Qatargas II.TOTAL’s production in Qatar (including its share in the productionof equity affiliates) averaged 58 kboe/d in 2006.

After the third phase of development on the North zone was com-pleted on the Al Khalij field (100%) in 2004, efforts to maintain pro-duction contributed to production of 42 kb/d (in 100%) in 2006.

TOTAL holds a 20% interest in the upstream operations of Qatargas I, which produces natural gas and condensates on a block in the North field. The Group also owns a 10% interest inthe Qatargas I liquefaction plant. A de-bottlenecking project wascompleted in June 2005, raising the production capacity for thethree trains to nearly 10 Mt/y. Production in 2006 reached 9.9 Mt.

Abu Dhabi: the TOTAL stand at the international Gastech conference

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UPSTREAM / EXPLORATION & PRODUCTION u 39

In December 2001, the Group signed a contract with state-ownedQatar Petroleum providing for the sale of 2,000 Mcf/d of gas fromthe North field, produced by the Dolphin project (24.5%), for a 25-year period. This gas is expected to be transported to theUnited Arab Emirates through a 360 km gas pipeline. The finaldevelopment plan was approved in December 2003 by the Qatariauthorities and the construction contracts were awarded in 2004.Construction progressed on both the Ras Laffan Industrial City siteand the offshore section. Production is scheduled to begin in the summer of 2007.

In February 2005, TOTAL signed a memorandum of understandingto acquire a 16.7% interest in the second train of Qatargas II. This integrated project intends to develop two new LNG trains,each with an annual capacity of 7.8 Mt. In July 2006, TOTALsigned four contracts to purchase 5.2 Mt/y of LNG on behalf of theGroup. In December 2006, TOTAL formalized its acquisition of the16.7% in the second train of Qatargas II. The project is scheduledto begin operations in the winter of 2008/2009.

In July 2005, TOTAL announced a project to locate a ResearchCenter in the Qatari Scientific and Technical Complex, which isexpected to be completed in 2007.

SyriaTOTAL has been present in Syria since 1988 and is the operatorof nearly 10% of the country’s production.

The Deir Ez Zor permit (100%, operated by DEZPC, 50% of whichis held by TOTAL) is the Group’s only remaining asset in Syria sincethe expiration of the BOT (build, operate, transfer) contract for theDeir Ez Zor gas and condensates reprocessing plant (50%) whosefacilities were transferred to state-owned SGC (Syrian GasCompany) on January 1, 2006.

In 2006, the Group’s production from the Deir Ez Zor permit was 17 kboe/d.

YemenTOTAL has been present in Yemen since 1987 and operatesapproximately 10% of the country’s production. The Group hasinterests in the country’s two oil basins, as the operator on Block10 (Masila Basin, East Shabwa permit 28.57%) and as a partneron Block 5 (Marib Basin, Jannah permit 15%).

A new production record was set in 2006 on the East Shabwa permit, with 40 kb/d in 100%, 25 kb/d of which came from the“basement” zone, whose development was launched in 2003.Development of the basement is expected to continue through2007 and 2008 in order to take full advantage of this discovery.

TOTAL’s production also comes from its share in the Jannah permit, where production averaged 45 kb/d (in 100%) in 2006, stable compared to the previous years.

The Yemen LNG liquefied natural gas project, operated by YemenLNG, a company in which TOTAL (39.62%) is the principal share-holder, was officially launched in August 2005. This project calls forthe construction of two liquefaction trains with a combined capa-city of 6.9 Mt/y. Operations are expected to begin late in 2008.

Yemen LNG signed three long-term LNG sales contracts in 2005,one each with Total Gas & Power Ltd (2 Mt/y) and with Suez (2.5 Mt/y) for deliveries to the United States over a 20-year periodto begin in 2009, and the third with Kogas (2 Mt/y) to be deliveredto South Korea, also for a 20-year period.

Yemen: laying the gaspipeline from Marib to Balhaf

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Qatar: the DOL 1platform for the Dolphinproject

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40 o TOTAL IN 2006

I GAS & POWERThe Gas & Power division encompasses the marketing, trading,transport and storage of natural gas and liquefied natural gas(LNG), LNG re-gasification and the maritime transport and tradingof liquefied petroleum gas (LPG). It also includes power generationfrom combined cycle plants and renewable energies, the tradingand marketing of electricity as well as the production and marke-ting of coal. TOTAL is continuing to develop its global presence in each of these activities.

Natural GasIn 2006, TOTAL pursued its strategy of developing its activitiesdownstream from natural gas production to optimize access forthe Group’s present and future gas production and reserves to traditional (organized around long-term contracts between pro-ducers and integrated gas companies) as well as newly (or soon to be) deregulated markets.

EuropeTOTAL has been active in the downstream sector of the gas valuechain for more than 60 years. Natural gas transport, marketing and storage activities were initially developed to complement theGroup’s domestic production in Lacq (France).Today, TOTAL’s objective is to become a leading supplier of gasto European industrial and commercial customers.

Since April 2005, the Group’s transport and storage activities in southwest France have been brought under a wholly-ownedsubsidiary, TIGF, which operates a regulated transport network of 4,905 km of pipelines and two storage units with a combinedusable capacity of 85 Bcf (2.4 Bm3), approximately 20% of theoverall natural gas storage capacity in France (a).

Highlights of 2006 included the inauguration of the Euskadourpipeline (TIGF, 100% of the portion in France). This pipeline, whoseconstruction was approved in 2003, is the second pipeline to connect the Atlantic coasts of Spain and France.

In 2006, TOTAL sold 243 Bcf (6.9 Bm3) of natural gas to Frenchcustomers through its marketing subsidiary Total Énergie Gaz(TEGAZ).

In Spain, since 2001, TOTAL has a direct and indirect interest ofapproximately 52% in Cepsa Gas Comercializadora (CEPSA),which sold approximately 119 Bcf (3.4 Bm3) of natural gas in 2006.CEPSA is participating in studies for the Medgaz gas pipeline

project, planned to directly connect Algeria and Spain, through its 20% interest, which gives TOTAL an indirect interest of 10% in the project. The Group relinquished its direct participation in theproject in 2006.

In the UK, TOTAL’s subsidiary Total Gas & Power Ltd sells gas andpower to the industrial and commercial markets. This subsidiaryalso conducts global gas, electricity and LNG trading activities. In 2006, Total Gas & Power Ltd marketed 135 Bcf (3.8 Bm3) of natural gas to industrial and commercial customers. Electricitysales in 2006 amounted to 3.2 TWh in 2006. In addition, TOTALholds a 10% interest in Interconnector UK Ltd, a gas pipelineconnecting Bacton in the United Kingdom to Zeebrugge inBelgium.

The AmericasIn the United States, TOTAL sold approximately 925 Bcf (26.2 Bm3)of natural gas in 2006, supplied by its own production and external sources.

In Mexico, Gas del Litoral, a company in which TOTAL holds a 25% interest, sold approximately 25.5 Bcf (0.7 Bm3) of naturalgas in 2006.

In South America, TOTAL owns interests in several natural gastransport companies in Argentina, Chile and Brazil, including15.4% in Transportadora de Gas del Norte (TGN), which operatesa gas transport network covering the northern half of Argentina,56.5% of the companies which own the GasAndes pipelineconnecting the TGN network to the Santiago del Chile region and9.7% of Transportadora Gasoducto Bolivia-Brasil (TBG), whosegas pipeline supplies southern Brazil from the Bolivian border.These different assets represent a total integrated network ofapproximately 9,000 km serving the Argentine, Chilean andBrazilian markets from gas-producing basins in Bolivia andArgentina, where the Group has natural gas reserves.

The actions taken by the Argentine government after the 2001economic crisis and the subsequent energy crisis put TOTAL’sArgentine subsidiaries in difficult financial and operational situa-tions. In 2006, TOTAL continued its efforts to preserve the value of these subsidiaries’ assets. In particular, TGN’s debt was restruc-tured after approval by 99.4% of the company’s creditors.

AsiaTOTAL markets natural gas, transported through pipelines from Indonesia, Thailand and Myanmar and in the form of LNG, in Japan, South Korea, Taiwan and India. The Group is also deve-loping new LNG outlets in emerging markets.

Yemen: training courses for localemployees (Yemen LNG)

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(a) Source: International Gas Union 2006.

UPSTREAM / GAS & POWER u 41

In India, highlights of 2006 included the marketing of 0.8 Bm3

of natural gas from the Hazira terminal. This represents, after re-gasification, the equivalent of approximately 600,000 tons of LNGwhich was supplied through the international LNG spot market.

In Japan, TOTAL holds a 3% stake in DME-Development and a 6%stake in DME-International, along with nine Japanese corporatepartners. These companies aim to develop a new process toobtain DiMethyl Ether (DME), an environmentally-friendly liquid fuel,by conversion of natural gas into carbon monoxide and hydrogenfollowed by a chemical transformation of this synthetic gas. A pilotplant with a capacity of 100 tons per day of DME was built inKushiro, on the Hokkaido Island, where several tests were perfor-med between 2004 and 2006. The various tests conducted at theplant since then have enabled DME-Development to confirm thepotential of this new technology. DME production since the start-up of the plant totaled 20,000 tons as of the end of 2006. In 2006,DME-International continued to pursue feasibility studies for theconstruction of commercial production units.

Liquefied Natural Gas (LNG)TOTAL has entered into agreements to obtain long-term access toLNG re-gasification capacity on the three continents which are thelargest consumers of natural gas: North America (United Statesand Mexico), Europe (France, United Kingdom) and Asia (India).With these agreements in place, TOTAL is positioned to developnew natural gas liquefaction projects, notably in the Middle East.

EuropeIn June 2006, TOTAL acquired a 30.3% interest in the Société duTerminal Méthanier de Fos Cavaou (STMFC). This re-gasificationterminal is scheduled to start receiving LNG deliveries at the end of2007. In the future, the terminal is expected to have a re-gasifica-tion capacity of 8.25 Bm3 per year (6.1 Mt/y), of which 2.25 Bm3

per year (1.7 Mt/y) have been reserved by Total Gas & Power Ltd.

In December 2006, in connection with its entry in the Qatargas IIproject, TOTAL acquired an 8.35% interest in the South Hook LNGre-gasification terminal project in the UK.

In addition, as part of the Snøhvit project (Norway), Total Gas &Power Ltd signed an agreement in 2004 to purchase 1 Bm3

per year (0.7 million of tons per year) of LNG intended mainly for marketing in North America and Europe. TOTAL holds an18.4% interest in the Snøhvit liquefaction plant currently underconstruction. The first deliveries are expected in the last quarter of 2007. TOTAL (through its subsidiary Total Norge) has charteredan LNG tanker, the Arctic Lady, to transport this LNG. This tankerwas built by Mitsubishi Heavy Industries in Nagasaki (Japan) andwas delivered to TOTAL in April 2006.

North AmericaIn Mexico, the construction of the Altamira re-gasification terminal,in which TOTAL holds a 25% interest, was completed on scheduleduring the summer of 2006. This new terminal, located on the eastcoast of Mexico, has an initial LNG re-gasification capacity of 6.7Bm3 per year (1.7 Bm3 TOTAL share), and started its commercialoperations at the end of September 2006.

In the United States, under an agreement signed in November2004 to reserve re-gasification capacity at the Sabine Pass LNGterminal in Louisiana, TOTAL has reserved a re-gasification capacity of 10 Bm3 (1 Bcf per day), beginning in April 2009 for arenewable 20-year period. The construction of this terminal, whichbegan in April 2005, is due to be completed in 2008. The LNG tosupply Sabine Pass is expected to come from LNG purchase

agreements providing for shipments from various producing projects in which TOTAL holds interests, in particular in the MiddleEast, Norway and West Africa.

Asia PacificThe Hazira re-gasification terminal, located on the west coast ofthe Gujarat state in India, was inaugurated in April 2005. It has aninitial capacity of approximately 3.4 Bm3 per year. Since May 2005,TOTAL has held a 26% interest in this merchant terminal whoseactivities include taking delivery of LNG, re-gasification and naturalgas marketing. TOTAL has agreed to provide up to 26% of theLNG for the Hazira terminal. Due to market conditions, in 2005 and2006 the Hazira terminal was essentially operated on the basis ofshort-term (spot) contracts, both for the sale of gas on the Indianmarket and the purchase of LNG from international markets.Twelve cargos were delivered in 2006.

Middle EastIn Qatar, pursuant to heads of agreement signed in February 2005,TOTAL signed purchase contracts in July 2006 for up to 5.2 Mt/yof LNG from Qatargas II (second train) over a 25-year period. This LNG is expected to be marketed in France, the UK and NorthAmerica. In December 2006, TOTAL concluded an agreement to acquire a 16.7% interest in the second train of Qatargas II.

In Yemen, through its wholly-owned subsidiary Total Gas & PowerLtd, TOTAL, signed an agreement in July 2005 with Yemen LNGLtd (in which TOTAL has a 39.62% interest) to purchase 2 Mt/y of LNG over a 20-year period, beginning in 2009, to be deliveredto the United States.

In Iran, as part of the agreements for the Pars LNG project (in which TOTAL has a 40% interest), Total Gas & Power Ltd signeda long-term purchase agreement for approximately 3 Mt/y of LNG.This agreement is conditioned upon the final investment decisionfor the project regarding the construction of two liquefaction trains,each with a capacity of 5 Mt/y.

AfricaIn Nigeria, train 4 of Nigeria LNG Ltd (NLNG), a company in whichTOTAL holds a 15% interest, began operations in November 2005,followed by train 5 in February 2006. These two additional trains,with a liquefaction capacity of 4 Mt/y of LNG each, increased thetotal nominal capacity of the plant to 17.9 Mt/y. TOTAL took deli-very of its first LNG shipment from Nigeria in January 2006, undera contract providing for 0.23 Mt/y of LNG over a 20-year period.

In July 2004, in connection with NLNG’s decision to build a sixthgas liquefaction train at its Bonny plant (Nigeria), TOTAL, throughits subsidiary Total Gas & Power, purchased an additional 0.9 Mt/yof LNG over a 20-year period to be added to the initial 0.23 Mt/yfrom other trains. Deliveries from train 6 are scheduled to start in 2007.

In October 2006, TOTAL acquired a 17% interest in the Brass LNGproject to construct two liquefaction trains, each with a capacity of5 Mt/y, scheduled to begin deliveries in 2011. In connection withthe acquisition of this interest, in July 2006 TOTAL signed a preli-minary agreement with Brass LNG Ltd setting forth the principalterms for a LNG purchase contract for 1.65 Mt/y over a 20-yearperiod, destined mainly for North America and Western Europe. As is the case for purchase contract for train 7 of NLNG, this purchase contract for Brass LNG would also be subject to finalinvestment decision for the project, which is scheduled to begindeliveries early in the next decade.

42 o TOTAL IN 2006

TradingTOTAL’s subsidiary Total Gas & Power Ltd has been trading LNGcargos since 2001. This activity provides TOTAL with flexibility inthe supply of gas to its main customers. Suppliers are the mainliquefaction plants which produced more LNG than they wererequired to deliver under their long-term sales agreements (Nigeria,Oman, Abu Dhabi, Algeria and Egypt). The customers for thesecargos are located primarily in France, Spain and Asia (India,Japan and Taiwan). TOTAL sold nineteen spot cargos in 2006.

Liquefied Petroleum Gas (LPG)In 2006, TOTAL traded and sold 5.8 Mt of LPG (butane and propane) worldwide. Nearly half of this quantity originated fromfields or refineries operated by the Group. LPG trading involves theuse of six time-charters and approximately 60 spot charters. In 2006, this activity represented approximately 11% of worldwideseaborne LPG trade (a).

In 2006, TOTAL continued the construction, launched in November2003, of a LPG importation and storage unit located inVisakhapatnam, on the east coast of India in the state of AndhraPradesh. This terminal is expected to start commercial operationsmid-2007 and has a planned storage capacity of 60,000 tons and aplanned off-take capacity of 1.2 Mt/y. TOTAL has a 50% interest inthis project in partnership with Hindustan Petroleum Company Ltd.

Power and CogenerationAs a refiner and petrochemicals producer, TOTAL has interests inseveral cogeneration facilities. Cogeneration is a process wherebythe steam produced to turn turbines to generate electricity is thencaptured and used for industrial purposes.TOTAL also participates in another type of cogeneration, whichcombines power generation with water desalination, and in gas-fired power generation, as part of its strategy of pursuingopportunities at all levels of the gas value chain.

The Taweelah A1 cogeneration plant in Abu Dhabi, which combi-nes power generation and water desalination, has been in opera-tion since May 2003 and is owned and operated by Gulf TotalTractebel Power Cy, in which TOTAL has a 20% interest.Taweelah A1 currently has a total power generation capacity of1,430 MW and a water desalination capacity of 385,000 m3

per day. Near the end of 2006, it was decided to develop an addi-tional 250 MW of capacity, which is expected to enter into opera-tion in 2009.

In Thailand, TOTAL owns 28% of Eastern Power and ElectricCompany Ltd (EPEC) which has operated the combined cycle gaspower plant of Bang Bo, with a capacity of 350 MW, since March2003.

In Argentina, in November 2006 TOTAL sold its 63.9% interest inCentral Puerto S.A., a company which owns and operates gas-fired power stations in Buenos Aires and in the Neuquén region,with a total capacity of 2,165 MW. In December 2006, TOTAL alsosold its 70% interest in Hidroneuquen, a company owning a 59%interest in a hydroelectric dam located in the Neuquén region.

In Nigeria, TOTAL and its partner, the state-owned NNPC, are participating in two projects to construct gas-fired power genera-tion units. These projects are part of the Nigerian government’spolicy to develop power generation, stop gas flaring and privatizethe power generation sector:• the Afam project, part of the SPDC joint-venture in which TOTAL

holds a 10% interest, concerns the upgrading of the Afam V

power plant capacity, to 276 MW, and the development of theAfam VI power plant, with a planned capacity of approximately600 MW; and

• the OML 58 project, part of the EPNL joint-venture in whichTOTAL holds a 40% interest (operator), concerns the develop-ment of a new 400 MW combined-cycle power plant near thecity of Obite.

Renewable EnergyAs part of its sustainable development policy, TOTAL is developingits position in renewable energy, with a particular focus on solar-photovoltaic energy, where the Group has been present since1983, and wind power. In addition, since 2005, TOTAL has beenparticipating in the development of marine energy, another promi-sing technology for renewable energy.

Solar-photovoltaic powerIn solar power (silicon-crystal technology), TOTAL manufacturesphotovoltaic cells (Photovoltec), solar panels and designs solarsystems (TENESOL). The Group is also involved in financing projects for rural electrification (Temasol in Morocco and KES inSouth Africa).

Since January 2006, TOTAL has held 47.8% in Photovoltech, acompany specialized in manufacturing photovoltaic cells.Photovoltech sales rose to approximately 44 M€ in 2006, from 25M€ in 2005. Due to strong demand for and the successful marke-ting of its products, Photovoltech is planning to increase its totalproduction capacity from 20 MWp/y to 80 MWp/y by the end of2007. Civil engineering for the new production facilities to increasecapacity began in the fall of 2006.

TOTAL holds a 50% interest in TENESOL, its partnership with EDF,which designs, manufactures, markets and operates solar-photo-voltaic power systems. Its principal markets are for networkconnections in Europe (Germany and Spain) and for decentralizedrural electrification and telecommunication systems in the FrenchOverseas Territories. TENESOL owns two solar panel manufactu-ring plants: TENESOL Manufacturing in South Africa, with anannual production capacity of 35 MWp, and TENESOLTechnologies in the region of Toulouse, France, with an annual production capacity of 15 MWp.

TOTAL is pursuing decentralized rural electrification activities byresponding to call for tenders from authorities in several countries,including Mali, Morocco, Senegal and South Africa.

In South Africa, an ongoing project to equip 15,000 households,led by Kwazulu Energy Service Company (TOTAL, 35%), hadequipped nearly 9,000 households by the end of 2006.

In Morocco, Temasol, in which TOTAL has indirect intereststhrough Total Maroc (32.2%) and TENESOL (35.6%), continued itsdevelopment. In 2006, approximately 24,000 of the total of 58,500households covered by these projects were equipped. InMorocco, Temasol, in which TOTAL has indirect interests throughTotal Maroc (32.2%) and TENESOL (35.6%), continued its deve-lopment. In 2006, approximately 24,000 of the total of 58,500 hou-seholds covered by these projects were equipped.

Wind powerTOTAL currently operates a wind farm in Mardyck (close to itsFlanders refinery in northern France) and is conducting develop-ment studies for onshore and offshore projects in France, the United Kingdom and Spain.

Mardyck, commissioned in November 2003, has a capacity of 12MW and produced approximately 25.2 BWh of electricity in 2006.

(a) Source : Poten & Partners - LPG IN WORLD MARKETS – Yearbook 2006.

UPSTREAM / GAS & POWER u 43

It is designed to allow comparison of different technologies at thesame site in order to prepare for possible larger scale offshore oronshore projects in the future.

In December 2005, after a call for tenders, TOTAL was selected bythe French Ministry of Industry for an onshore wind power projectwith a planned capacity of 90 MW to be built in Aveyron region.Pursuant to the terms of the bid, the project is subject to obtaininga construction permit. The public consultation for this projectbegan in January 2007, and the wind farm is expected to beginoperations in 2009. Work on this project will be conducted by the Éoliennes de Mounès company, in which TOTAL has a 50%interest.

TOTAL is also preparing for the development of a wind farm with a 120 MW capacity offshore Dunkirk, France. This project, in whichTOTAL holds a 50% interest, should benefit from the power purchase terms set in the tariff order released on July 10, 2006.

Marine energyIn marine energy, TOTAL acquired a 10% interest in a pilot projectlocated offshore Santona, on the northern coast of Spain, in June2005. The construction and test of a first buoy, approved in 2006,should determine the final size of the project, as well as its plannedgeneration capacity. This pilot project is expected to provide infor-mation necessary to assess the technical and economic potentialof this technology.

TOTAL has a 21.5% interest in Scotrenewables Marine Power, a company, located in the Orkney Islands in Scotland (UK). Thiscompany is developing tidal current energy converter technology.

CoalTOTAL sold approximately 9.2 Mt of coal worldwide in 2006 (compared to 9.5 Mt in 2005 and 11.3 millions of tons in 2004), of which 4.4 Mt was South African steam coal produced by theGroup. Approximately 75% of the Group's South African coal production was sold to European utility companies and approxi-mately 12% was sold in Asia.

The Group’s South African coal is exported through the port of Richard’s Bay, the world largest coal terminal, of which 5.7% is owned by TOTAL. On the South African domestic market, salesamounted to 0.6 Mt in 2006, primarily intended for the industrialand metallurgic sectors.

In parallel, Total Coal South Africa (TCSA) is developing new mines,including the construction of the Forzando South mine, which wascompleted near the end of 2006 and which is expected to reachits planned production capacity of 1.2 Mt/y by 2009.

TOTAL is also active in coal trading through its wholly-owned subsidiary Total Energy Resources (TER) in Hong Kong andthrough a representative office established in Jakarta in September2004. Of the 2.6 Mt of coal traded in 2006, 62% was sold in Asia.

In France, TOTAL, through its subsidiary CDF Énergie, is an impor-tant steam coal distributor in the industrial sector (paper, cement,agro-food, residential heating, etc.), with sales of 2.2 Mt in 2006,originating from diverse sources outside the Group.

France: the Mardyck wind farmon the site of the Flandersrefinery (Dunkirk)

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South Africa: the Forzando colliery

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44 o TOTAL IN 2006

DOWNSTREAM SEGMENT FINANCIAL DATA

(in M€) 2006 2005 2004

Non-Group sales 113,887 99,934 86,896

Adjusted operating income 3,644 3,899 3,235

Adjusted net operating income 2,784 2,916 2,331

uu The Downstream segmentconducts TOTAL’s refining, marketing, trading and shippingactivities.

No. 1 in Western European refining/marketing (a).

No. 1 in African marketing (b).

Refining capacity of approximately 2.7 Mb/dat year-end 2006.

Nearly 17,000 retail stationsat year-end 2006.

Approximately 3.8 Mb/d ofproducts sold in 2006.

One of the leading world-wide traders of oil and refined products.

1.78 B€ invested in 2006.

34,467 employees.(a) Company sources, Oil and Gas Journal of December 18, 2006.(b) Company sources, PFC Energy, December 2006.

DOWNSTREAM

Conditions in the oil market remained globally favorable in 2006. Refinery margins, while lower thanin 2005, remained on average at satisfactory level.

In 2006, the downstream net operating income averaged 2,784 M€ compared to 2,916 M€ in 2005,down from 5%.

Expressed in dollars, the downstream adjusted netoperating income averaged $3.5 billion, down from$0.1 billion compared to 2005. This evolution is notably due to the impact of the weaker refiningenvironment, partially offset by favorable marketeffects (-$0.65 billion), the impact of performanceimprovement (approximately $0.3 billion) and the positive effect (an estimated $0.25 billion) of the recovery after the disruption of activities in 2005 (strikes in France and consequences of Hurricane Katrina in the United States).

DOWNSTREAM / REFINING & MARKETING u 45

France: inauguration of the hydrocracker (DHC) at the Normandy refinery

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Germany: the Leuna refinery

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France: operators working on a storage tank at the La Mède refinery (Marseille)

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In 2006, refinery throughput averaged 2,454 kb/d compared to2,410 kb/d in 2005, up 2%. Refinery utilization rate was 88% in2006.

I REFINERY THROUGHPUT (kb/d)*

2,454 kb/d

2004

2,496313

2 183

313

2 097

297

2 157

2005

2,410

2006

2,454

� Europe � Rest of world

I 2006 REFINED PRODUCTS SALES BYGEOGRAPHICAL AREA: 3,786 kb/d*

15%Americas

9%Africa

5%Rest of world

71%Europe

* Including trading activities and Group’s share in CEPSA.

* Including Group’s share in CEPSA.

As of December 31, 2006, TOTAL’s worldwide refining capacitywas 2,700 thousand barrels per day (kb/d). The Group’s refinedproducts sales worldwide were 3,786 kb/d (including trading activities), compared to 3,792 kb/d in 2005 and 3,761 kb/d in2004. TOTAL is the largest refiner/marketer (a) in Western Europeand, with a market share of 11%, the largest marketer in Africa (b).As of December 31, 2006, TOTAL’s marketing network consistedof 16,534 retail stations worldwide, of which approximately 50%are owned by the Group. TOTAL’s refineries also allow the Groupto produce a broad range of specialty products, such as lubricants, liquefied petroleum gas (LPG), jet fuel, special fluids,bitumen and petrochemical feedstock.

Since 2004 TOTAL has pursued a sustained refining investmentprogram to respond to changes in the oil market. This program,initiated with the construction of a distillate hydrocracker (DHC) atthe Group’s refinery in Normandy, France, continued in 2006 withthe launch of engineering studies for two major projects: theconstruction of a full-conversion refinery in Saudi Arabia and theconstruction of a deep conversion unit at the Port Arthur, Texas,refinery. Under this program, the Group plans to invest an averageof 1 B€ per year in refining over the 2006-2010 period (excludingcapitalization of turnarounds).

For its marketing activities, the Group’s strategy is to strengthen itspositions in Europe and Africa and to pursue targeted growth incertain other markets, in particular in Asia.

I REFININGAs of December 31, 2006, TOTAL held interests in 27 refineries(including thirteen that it operates), located in Europe, the UnitedStates, the French West Indies, Africa and China.

TOTAL’s refining capacity in Western Europe is 2,342 kb/d,accounting for more than 85% of the Group’s global refining capa-city and making TOTAL the leading refiner in this region. TOTAL operates twelve refineries in Western Europe. TOTAL alsohas minority interests in another German refinery (Schwedt) as wellas interests in four Spanish refineries through its holdings inCEPSA.

In the United States, TOTAL operates the Port Arthur, Texas, refinery near the Gulf of Mexico, which has a production capacityof 174 kb/d.

TOTAL, Sinochem and PetroChina have been in partnership formore than ten years in the WEPEC refinery located in Dalian(China), whose annual refining capacity averages 219 kb/d. TOTALholds a 22.41% interest in this refinery.

From 2006 to 2010, TOTAL plans to invest approximately 5 B€in refining, excluding capitalization of turnarounds. Nearly 40% isdesignated for projects to increase refining capacities and forconversion projects to upgrade heavier crudes. Nearly 20% is des-ignated for developing units and desulphurization to process high-sulphur crudes. Finally, approximately 30% is designated formodernizing refining sites, improving safety and energy efficiencyand reducing environmental impacts.

• Concerning growth and conversion, two major projects were ini-tiated in Saudi Arabia and the United States in the first half 2006.TOTAL and The Saudi Arabian Oil Company (Saudi Aramco)signed a Memorandum of Understanding (MOU) related to a pro-ject for the construction and operation of a refinery with a capacityof 400 kb/d in Jubail, Saudi Arabia. This fullc-onversion refinery is being designed to process Arabian Heavy crude and producehigh-quality refined products adapted for all markets, mainly

(a) Source: Oil and Gas Journal, December 18, 2006.(b) Company sources, PFC Energy, December 2006.(c) Group’s share in CEPSA: 48.83% as of December 31, 2006.(d) To which should be added a crude distillation unit (CDU), a vacuum distillation unit(VDU) and a steam methane reformer (SMR).

for export. A comprehensive joint Front-End Engineering andDesign (FEED) study was undertaken in July 2006. Saudi Aramcoand TOTAL agreed to form a joint venture company in which SaudiAramco and TOTAL would each hold 35% and the remaining 30%would be listed on the Saudi stock exchange, subject to the approval of the relevant authorities, at the end of the FEED(beginning of 2008). Start-up of the refinery is scheduled for 2011.TOTAL launched studies for the construction of a deep conversionunit or coker at the Port Arthur refinery in the United States. This project is being designed to upgrade heavy crudes and pro-duce lighter products for a structurally short American fuel market.• Performance investments are designed to adapt TOTAL’s refine-ries to changes in the European oil market: growing demand fordiesel and increasing supply of high-sulphur crudes.The first project of this type is the construction of a distillate hydro-cracker (DHC) at the Normandy refinery in France. This unit, whoseconstruction began in the spring of 2004, came on-stream successfully in 2006. The project represented a total investment of approximately 550 M€ over the 2003-2006 period, and alsoincluded, the construction of a hydrogen production unit.The Group also decided to build a desulphurization unit at theLindsey (Immingham) refinery in the UK. This investment is beingdesigned to raise the portion of high-sulphur crude that the plantcan process from 10% to 70%. The unit is scheduled to beginoperating in 2009. A second project to build a desulphurizationunit at the Donges refinery in France is currently being studied.Commissioning is planned for 2010. A third project to construct a desulphurization unit at the Leuna refinery in Germany is alsobeing studied.In addition, CEPSA (c) has announced investments to improve theperformance of its refineries, including the construction of a 2.1 Mthydrocracker (d) unit at the Huelva refinery in Spain. This unit isscheduled to begin operating near the end of 2009.

46 o TOTAL IN 2006

2006 2005 2004

88% 88% 92%

Crude oil refining capacityThe table below sets forth TOTAL’s share of the daily crude oil refining capacity of its refineries.

As of December 31 (a) 2006 2005 2004(kb/d)

Refineries operated by the Group

Normandy (France) 331 331 328

Provence (France) 158 158 155

Flandres (France) 141 159 160

Donges (France) 230 229 231

Feyzin (France) 116 118 119

Grandpuits (France) 99 99 99

Antwerp (Belgium) 350 350 352

Leuna (Germany) 227 225 227

Rome (Italy) (b) 64 64 52

Immingham (United Kingdom) 221 221 223

Milford Haven (United Kingdom (c) 74 73 73

Vlissingen (Netherlands) (d) 81 84 84

Port Arthur, Texas (United States) 174 174 176

Subtotal 2,266 2,285 2,279

Other refineries in which the Grouphas an interest (e) 434 423 413

Total 2,700 2,708 2,692

(a) For refineries not 100% owned by TOTAL, the indicated capacity represents TOTAL’s proportionate share of the overall refining capacity of the refinery.(b) TOTAL’s interest was 71.9% as of December 31, 2006 and 2005; TOTAL’s interest was 57.5% as of December 31, 2004.(c) TOTAL’s interest is 70%.(d) TOTAL’s interest is 55%.(e) Fourteen refineries in which TOTAL has interests ranging from 16.7% to 55.6% (seven in Africa, four in Spain, one in Germany, one in Martinique and one in China) and the Reichstettrefinery in France in 2004).

Refined productsThe table below sets forth by product category TOTAL’s net share of refined product output.

(kb/d) 2006 2005 2004

Gasoline 532 534 580

Avgas and jet fuel 179 191 188

Kerosene and diesel fuel 660 639 712

Fuel oils and heating oils 582 593 552

Other products 455 406 419

Total (a) 2,408 2,363 2,451

(a) Including TOTAL’s share in CEPSA.

Utilization rate (crude refining only)

DOWNSTREAM / REFINING & MARKETING u 47

China: the Dalian refinery

o

France: the hydrocracker(DHC) at the Normandyrefinery

u

I MARKETINGThe Group is one of the leading marketers, in the combined six lar-gest European markets (France, Spain, Benelux, United Kingdom,Germany and Italy) (a). TOTAL is also the largest marketer in Africa,with a market share of 11%, after acquiring distribution affiliates in fourteen African countries in 2005 and 2006.

Morocco: a retail station in Casablanca

o

Sales of refined products (a)

The table below sets forth by geographic area TOTAL’s volumes of refined petroleum products sold for the years indicated.

(kb/d) 2006 2005 2004

France 837 852 882

Rest of Europe (a) 1,438 1,444 1,495

United States 264 256 257

Africa 274 260 245

Rest of world 153 151 129

Total excluding Trading 2,966 2,963 3,008

Trading (Balancing and Export Sales) 820 829 753

Total including Trading 3,786 3,792 3,761

(a) Including TOTAL’s share in CEPSA.

Retail stations The table below sets forth by geographic area the number of retail stations in the TOTAL’s network.

As of December 31 2006 2005 2004

France (a) 5,220 5,459 5,626

Rest of Europe (excluding CEPSA) 4,628 4,937 5,003

CEPSA (b) 1,672 1,677 1,697

Africa 3,562 3,505 3,199

Rest of world 1,452 1,398 1,332

Total 16,534 16,976 16,857

(a) Retail stations under the TOTAL and Elf brands and approximately 2,000 retail stations under the Élan brand.(b) Including all the retail stations within the CEPSA network.

(a) Company data, based on quantities sold.

Western EuropeIn Europe, TOTAL has a network of retail stations in France,Belgium, Luxembourg, the Netherlands, Germany, the UK,Portugal, Italy, and, through its 48.83% interest in CEPSA, Spainand Portugal.In France, the TOTAL-branded network has a diverse selection ofproducts (such as the Bonjour convenience stores) and strongcustomer loyalty programs. As of December 31, 2006, the net-work in France consisted of approximately 2,600 TOTAL brandedretail stations in France and nearly 300 Elf-branded retail stations.Elf-branded retail stations offer quality fuels and basic services atprices that are particularly competitive. TOTAL also markets fuelsat nearly 2,000 Élan-branded retail stations, generally located inrural areas.In Germany, a major network reorganization program was comple-ted in 2006, with the closing of 40 retail stations and the develop-ment of non-fuel sales. In the UK, a program launched in 2003 to rationalize sites andincrease non-fuel sales continued in 2006. Non-fuel sales increa-

sed following the opening of approximately 20 Bonjour conve-nience stores. As of December 31, 2006, TOTAL had a network of 475 AS24-branded retail stations in 20 European countries. This network,dedicated to professional transporters, opened 43 new retail sta-tions in 2006, mainly in Central and Eastern Europe.TOTAL is among the leaders in Europe for fuel-payment creditcards, with approximately 3.5 million cards issued in 16 Europeancountries. In 2006, more than 4.7 Mm3 of motor fuels were soldand paid for using TOTAL’s credit card.In 2006, TOTAL continued to expand its distribution in Europe oftwo new high-performance fuels branded TOTAL EXCELLIUM 98and TOTAL EXCELLIUM diesel. These new generation fuelsreduce fuel consumption and carbon dioxide emissions. With thelaunch of the EXCELLIUM range, TOTAL has acquired a significantshare of the market for next generation fuels in Europe.In 2005, TOTAL began distributing an urea-based additive calledAdBlue intended for professional transporters in Europe. As ofDecember 31, 2006, more than 130 TOTAL and AS24 retail

48 o TOTAL IN 2006

DOWNSTREAM / REFINING & MARKETING u 49

(a) Company sources, on the basis of volumes sold.

stations were equipped to distribute bulk and conditioned urea.Between now and 2009, TOTAL expects to progressively expandits distribution of AdBlue to include a network of approximately 400retail stations in 27 European countries.

AfricaTOTAL is present in more than 40 African countries and has interests in seven refineries.

In 2005, TOTAL strengthened its position in Africa through theacquisition of distribution affiliates in fourteen African countries(Djibouti, Eritrea, Ethiopia, Ghana, Guinea Conakry, Liberia,Malawi, Mauritius, Mozambique, Sierra Leone, Chad, Togo,Zambia and Zimbabwe). This acquisition, completed in 2006,includes 500 retail stations and 29 terminals and depots with anoverall capacity of 380,000 m3. Through this agreement, TOTALhas strengthened its presence in West Africa, consolidating itspositions in East Africa and becoming the largest marketer ofpetroleum products in Africa.

AsiaTOTAL is present in nearly 20 Asian countries.

Building on their experience together at the Dalian refinery, in 2005TOTAL and Sinochem decided to develop two retail station network partnerships in China. A joint venture agreement, signedin March 2005, is designed to develop a network of 200 retail stations in Beijing and in the area north of the city. At the end ofDecember 2006, 22 retail stations were operating. A second joint venture agreement for the creation of a network of 300 retailstations in the provinces of Shanghai, Jiangsu and Zhejiang in eas-tern China was signed in September 2005. The first retail stationopened in November 2006. These investments represent a majorstep forward in TOTAL’s strategy of expanding its petroleum pro-ducts marketing operations in China.

In July 2006, TOTAL strengthened its positions in the Pacific areathrough the acquisition of assets in Fiji, Samoa and Tonga. The acquisition includes a network of retail stations, approximately

ten terminals and depots, as well as sales and distribution of fuel,lubricants, aviation and marine petroleum products. TOTAL alsoacquired assets in Cambodia in December 2006 to strengthen itsexisting activities. Both acquisitions remain subject to any neces-sary approval by the relevant authorities in each country.

In 2006, after the distribution of petroleum products was partiallyopened to foreign companies in Indonesia, TOTAL decided todevelop a pilot network of five retail stations in Jakarta.

SpecialtiesTOTAL produces a wide range of refined petroleum products at itsrefineries and other facilities. TOTAL is among the leading compa-nies in the European specialty products market, particularly in thebitumen, jet fuel and lubricant markets.

TOTAL markets lubricants in more than 150 countries. In 2006, TOTAL strengthened its positions in the lubricants marketby signing supply agreements with car manufacturers Nissan andHonda. In September 2006, TOTAL entered into a joint ventureagreement with Veolia Group (TOTAL 35%) to build a 120 kt capa-city oil recycling plant in France. Commissioning of the plant isscheduled for 2008.TOTAL continued to develop its liquefied petroleum gas (LPG) distribution activities on a worldwide scale, and is the fourth largestinternational distributor (a).

Germany: a Munich retailstation supplyinghydrogen

o

I TRADING & SHIPPINGThe Trading & Shipping sector:• sells and markets the Group’s crude oil production;• provides a supply of crude oil for the Group’s refineries;• imports and exports the appropriate petroleum products for the

Group’s refineries to be able to adjust their production to theneeds of local markets;

• charters appropriate ships for these activities; and• undertakes trading on various derivatives markets.

Although Trading & Shipping’s main focus is serving the Group, itsknow-how and expertise also allow Trading & Shipping to extendthe scope of its activities beyond meeting the strict needs of theGroup.

TradingTOTAL is one of the world’s major traders of crude oil and refinedproducts on the basis of volumes traded. The table opposite setsforth selected information with respect to TOTAL’s worldwide salesand source of supply of crude oil for each of the last three years.

France: an Elf-branded retailstation

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(a) ETBE: Ethyl-Tertio-Butyl-Ether.(b) Including Algeciras and Huelva refineries (CEPSA).(c) VOME: Vegetable-Oil-Methyl-Esther.

The VLCC “La Famenne”,under time charter to the Group

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Bio-fuels and hydrogenThe Group plays an active part in the promotion of renewable energies and alternative fuels.

In 2006, TOTAL consolidated its position as an important oil andgas company active in biofuels in Europe by producing and incor-porating 500 kt of ETBE (a) in seven refineries (b) (compared to 360kt in 2005 and 310 kt in 2004) and incorporating 420 kt of VOME (c)

in diesel fuels at nine European refineries and several storage sites.

In November 2006, TOTAL and several other parties (car manufac-turers, oil companies, agricultural representatives, ethanol produ-cers) signed the Superethanol E85 Development Charter, a charter to develop superethanol in France (fuel with up to 85% ofethanol from agricultural production, also called “flexfuel”). As partof this charter, TOTAL undertook to equip 200 to 275 retail stationsto distribute flexfuel by the end of 2007. The rate at whichSuperethanol is adopted by the market will depend both on thecreation of appropriate tax incentives and the marketing of suita-ble vehicles.

In 2006, TOTAL continued its research and testing programs forfuel cell and hydrogen fuels technologies. To this purpose, TOTALentered into cooperation agreements for automotive applications(with BMW in March 2006, Renault in 2003 and Delphi in 2001)and for stationary applications (with Electrabel and Idatech in2004). Under its partnership with BVG, the largest public transportcompany in Germany and the bus operator in Berlin, TOTAL created a Center of Excellence for Hydrogen in Berlin. The firstconsumer hydrogen fueling station opened in Berlin in March2006. As part of the partnership with BMW, a second hydrogenfueling station opened in December 2006 near the car manufactu-rer’s Innovation and Research Center. The construction of a thirdhydrogen fueling station in Europe is under study. TOTAL is also anactive participant in the hydrogen technology platform programlaunched by the European Commission at the end of 2003, inten-ded to promote the development of this technology in Europe.

50 o TOTAL IN 2006

Switzerland: traders at work in Geneva

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DOWNSTREAM / TRADING & SHIPPING u 51

ShippingThe principal activity of the Shipping division is to arrange the transportation of crude oil and refined products necessary for Group activities. The Shipping division provides a wide range of shipping services required by the Group to develop its activitiesand maintains a rigorous safety policy. Like a certain number of other oil companies and shipowners, the Group uses freight-rate derivative contracts in its shipping activity in order to manage its exposure to freight-rate fluctuations.

In 2006, the Shipping division of the Group chartered 3,170 voya-ges to transport approximately 127 Mt of oil. As of December 31,2006, the Group employs a fleet made up of sixty three vesselschartered under long-term or medium-term agreements (includingsix LPG tankers). The fleet is modern, with an average age of approximately five years and is predominately comprised of double-hulled vessels.

Throughout 2006, world crude tanker tonnage increased by4.9%.This was the fourth consecutive year of high-growth in termsof available crude tonnage. Tonnage demand in 2006 was lesssustained than the year before, due to the slowdown in the growthof global oil demand.

These trends reinforce a structural surplus of available tonnage,particularly in a situation where the orderbook reaches a historicalrecord, both in absolute value (124 million deadweight tons) and asa percentage of the active fleet (30% of the global fleet, between30% and 65% according to the different tanker segments).

On the crude tanker segment, after the seasonal rise observedduring the last quarter of 2005, the chartering markets droppedsignificantly throughout the year 2006, apart from some volatilepeaks. Following a strengthening of freight rates during the secondand third quarter, the rates declined significantly after August 2006,particularly for VLCCs. The situations in both the crude and thepetroleum products freight markets during the last quarter of 2006thus were not comparable to the historical level observed at theend of 2004 and 2005.The large number of deliveries expected in 2007, which should notbe offset by the demolition of ships, should lead to an increase in tonnage supply (+5.8%) (a) greater than the increase in ton-miles(+3%) (a).

In 2006, the principal market benchmarks stood at historically high levels:

2006 2005 2004 min 2006 max 2006

Brent ICE Futures - 1st Line (a) ($/b) 66.11 55.25 38.04 57.87 (2-Nov) 78.30 (7-Aug)

Gasoil ICE Futures - 1st Line (a) ($/t) 580.4 507.9 347.5 510.5 (12-Jan) 668.8 (10-Aug)

VLCC Ras Tanura Chiba - BITR (b) ($/t) 14.52 13.91 19.97 8.35 (6-Apr) 27.21 (25-Jan)

(a) 1st Line : Quotation for first month nearby delivery ICE Futures.(b) HLCC : Very Large Crude Carrier. BITR: Baltic International Tanker Routes.

Throughout 2006, the Trading division maintained a level of activity similar to levels attained in 2004 and 2005, trading physical volumes of crude oil and refined products amounting to an average of approximately 5 Mb/d.

(a) Source: PIRA.

Sales & supply of crude oil(kb/d, except %)

For the year ended December 31 2006 2005 2004Sales of crude oil

Total Sales 4,112 4,465 4,720

Sales to Downstream segment (a) 2,074 2,111 2,281

Sales to external customers 2,038 2,354 2,439

Sales to external customers as a percentage of total sales 50% 53% 52%

Supply of crude oil

Total supply 4,112 4,465 4,720

Produced by the Group (b) (c) 1,473 1,615 1,686

Purchased from external suppliers 2,639 2,850 3,034

Production by the Group as a percentage of total supply 36% 36% 36%

(a) Excludes share of CEPSA.(b) Includes condensates and natural gas liquids.(c) Includes TOTAL’s proportionate share of the production of equity affiliates.

The Trading division operates extensively on physical and derivatives markets, both organized and over the counter.In connection with its trading activities, TOTAL, like most other oil companies, uses derivative energy instruments to adjust itsexposure to fluctuations in the price of crude oil and refined products. The Trading division undertakes certain physical transactionson a spot basis, but also enters into term and exchange arrangements and uses derivative instruments such as futures,forwards, swaps and options. These operations are entered into with various counterparties. All of TOTAL’s trading activities are subjectto strict internal controls and trading limits.

52 o TOTAL IN 2006

CHEMICALS SEGMENT FINANCIAL DATA*

2006 2005 2004

(in M€)

Sales 19,113 16,765 14,886

Adjusted operating income 1,215 1,148 960

Adjusted net operating income (a) 884 (a) 967 (a) 936 (a)

CHEMICALS

I NON-GROUP SALESBY SECTOR

BaseChemicals

Specialities

I ADJUSTED OPERATINGINCOME BY SECTOR

BaseChemicals

Specialities

(a) Includes deferred tax change related to Arkema activities of 18 M€ in 2006, 151 M€ in 2005 and 148 M€ in 2004.* Under IFRS rules for discontinued operations, the historical statements on income and ROACE have been restated to exclude the contribution of Arkema.

uu The Chemicals segment is organized into the BaseChemicals activities (petrochemicals and fertilizers) and theSpecialties activities, which includes the Group’s rubber proces-sing, resins, adhesives and electroplating activities.

TOTAL is one of the world’s largest integrated chemical producers (a).

On May 12, 2006, TOTAL S.A.’s shareholders approved the spin-off of Arkema which included vinylproducts, industrial intermediates and performanceproducts.

Since May 18, 2006, Arkema has been listedon Eurolist by Euronext Paris.

France: a chemist at the EasternResearch and Development Center(ERDC) on the Carling Saint Avold site

o

France: a laboratory at the Soficarplant, specializing in carbon fibers

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South Korea: the Cray Valley Korearesins production plant

t

In 2006, the Chemicals segment sales amounted to 19.11 B€.Europe accounted for 57% of the segment’s overall sales for 2006and North America for 24%. The remaining 19% of 2006 saleswere principally realized in Asia and Latin America.

Results for the segment in 2006 benefited from the healthy worlddemand and continued to progress in spite of the increase in rawmaterials and energy prices. Petrochemical margins, relativelypoor during the first quarter of the year, gradually improved toreach high levels in the second semester, due to the combinedeffects of strong demand and a decrease in the price of naphtha.

In 2006, TOTAL’s Chemicals segment pursued its plan of actionsfocusing on three key areas: on-the-job safety, safety managementsystems and major risk prevention.

I BASE CHEMICALSTOTAL’s Base Chemicals activities encompass petrochemicalsand fertilizers.

Sales reached 12.01 B€ in 2006. Demand remained strong throu-ghout the year due to the favorable economic environment. In 2006, naphtha prices were very volatile, increasing markedlyduring the first half of the year before decreasing significantlyduring the second half. As a result, margins markedly improvedduring the latter part of the year. Adjusted net operating incomefrom Base Chemicals activities increased by more than 9% in 2006compared to 2005.

PETROCHEMICALS

TOTAL’s petrochemicals activities include olefins and aromatics(base petrochemicals) as well as polyethylene, polypropylene andstyrenics. On October 1, 2004, Total Petrochemicals was createdto regroup these activities.TOTAL’s main petrochemicals sites are located in Belgium(Antwerp, Feluy), France (Gonfreville, Carling, Lavéra, Feyzin), andthe United States (Port Arthur, Houston and Bayport in Texas,Carville in Louisiana) as well as in Singapore and China (Foshan).Most of these sites are either adjacent to or connected by

CHEMICALS u 53

(a) Source: company data, based on annual sales.

Base petrochemicalsBase petrochemicals encompass the olefins and aromatics producedby steamcracking petroleum cuts, mainly naphtha, as well as propy-lene and aromatics produced in the refineries of the Group. The eco-nomic environment for these activities is extremely volatile and marginsare strongly influenced by the evolution of the price of naphtha.

The year 2006 was characterized by important fluctuations in theprice of naphtha and a strong global demand in steam-crackerderivatives, reflecting the healthy economic environment.

In addition, a number of unplanned outages within the industry disturbed the supply of aromatics in North America and olefins in Europe, while the start-up of some petrochemical plants in theMiddle East was significantly delayed. These factors, combinedwith strong demand and the decrease in the price of naphtha in the second half of the year, contributed to keeping margins at high levels throughout the second half 2006.

Olefins production increased by 1% in 2006 compared to 2005.

PolyethylenePolyethylene is a plastic produced by the polymerization of ethy-lene manufactured in the Group’s steamcrackers. It is principallyintended for the packaging, automotive, food, cable and pipe markets. Margins are strongly influenced by the level of demandand by competition from expanding production in the Middle East,which takes advantage of favorable access to raw materials (ethy-lene, made from ethane).

In 2006, strong world demand helped to absorb new productionbrought onstream in the Middle East and in China as well as contri-

pipelines to Group refineries. As a result, most of TOTAL’s petrochemicals activities are closely integrated with the Group’srefining operations.

In August 2003, TOTAL entered into a 50/50 joint venture withSamsung General Chemicals. This joint venture, named Samsung-Total Petrochemicals, has an integrated site at Daesan in SouthKorea where it produces a wide range of petrochemicals productsand polymers which are marketed in Asia.

TOTAL’s objective is to strengthen its position among the leaders inpetrochemicals. In mature markets, TOTAL intends to improve thecompetitiveness of its existing large sites. In the faster growing Asianmarkets, TOTAL’s strategy is to expand its activities, either fromplants located within the more dynamic markets or from sites loca-ted in countries benefiting from favorable access to raw materials.

Samsung-Total Petrochemicals launched a major program toexpand and upgrade its site at Daesan as part of this strategy. This investment targets a significant expansion of the capacities of the steamcracker and of the styrene plant, as well as theconstruction of a new polypropylene line. Construction on theseplants is continuing, and they are expected to be brought on stream in 2007 and 2008, respectively.

In Qatar, where the Group has had a long-term presence throughits interest in Qapco, TOTAL, through its affiliate Qatofin, is partici-pating in the construction of an ethane-based steamcracker at Ras Laffan and of a new low-density polyethylene plant atMesaïeed. These two units are scheduled to be brought onstreamat the end of 2008.At all sites, safety and environmental improvements were in linewith the yearly targets set by the Group.

TOTAL’s production capacities by main product groups and regions

Europe North America Middle East Worldwide Worldwide Worldwide(kt/y) (2006) (2006) (c) (2006) (2006) (2005) (2004)

Olefins (a) 5,185 1,195 655 7,035 7,005 7,055

Aromatics 2,600 930 725 4,255 4,125 4,040

Polyethylene 1,315 440 280 2,035 2,035 2,130

Polypropylene 1,205 1,070 145 2,420 2,420 2,305

Styrenics (b) 1,240 1,350 515 3,105 3,175 3,110

(a) Ethylene, propylene and butadiene.(b) Styrene, polystyrene and elastomers (activity discontinued at the end of 2006).(c) Including minority interests in Qatar and 50% of Samsung-Total Petrochemicals capacities in Daesan (South Korea).

Belgium: the Total PetrochemicalsFeluy polymer production site

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54 o TOTAL IN 2006

buting to maintaining margins in spite of the increase in the rawmaterials prices. Sales in Europe were negatively affected by limited availability of ethylene. Nevertheless, TOTAL’s global salesvolumes increased by 1.4% in 2006 compared to 2005.

PolypropylenePolypropylene is a plastic produced by the polymerization of propylene manufactured in Group steamcrackers and refineriesand principally intended for the packaging, appliance, car industry,carpet and household and sanitary goods markets. Margins are primarily influenced by the level of demand and the availabilityand price of propylene.

In 2006, polypropylene demand was strong in Europe, where sup-ply and demand were generally balanced, and margins remainedsatisfactory. However in the United States, both demand and margins were negatively affected by the volatility and high price of propylene. In Asia, demand and margins improved in thesecond semester after a weak start of the year. Sales volumesincreased by 1.8% in 2006 compared to 2005.

StyrenicsThis business unit encompasses styrene monomer and polystyrene.The elastomers activity was shut-down in 2006. Most of the styrene produced by the Group is used in the produc-tion of polystyrene. Polystyrene is a plastic principally used inpackaging, domestic appliances, electronics and audio-video.Margins are strongly influenced by the level of polystyrene demandas well as by the price of benzene, the principal raw material.In 2006, the increase in world styrene demand was relatively weak,approximately 2%, and demand continued to decline in Europe.

World polystyrene demand varied little after the effect of the increa-sed competition of other materials, plastics and paper. Marginswere affected by the high prices of raw materials, ethylene andbenzene, and by the high costs of energy. Nevertheless, TOTAL’spolystyrene sales volumes increased by 0.3% in 2006 comparedto 2005.

FERTILIZERS

The Fertilizers business unit (Grande Paroisse) manufactures andmarkets nitrogen fertilizers made using natural gas, and complexfertilizers manufactured using nitrogen, phosphorus and potas-sium products. Margins are strongly influenced by the price ofnatural gas.

In 2006, Grande Paroisse’s sales decreased by 11% compared to2005. The activity was negatively affected by turnarounds andvarious technical problems incurred in the Group’s nitrogen plants,and also by the weak demand for fertilizers during the first part of the year. Furthermore, the increase in the price of natural gashad a negative impact on margins.

In July 2006, Grande Paroisse stopped its French production ofcomplex fertilizers due to the continuously declining market forthose products and closed its plants in Bordeaux, Basse Indre,Rouen and Granville. Besides, Zuid Chemie - the Dutch affiliate of Grande Paroisse - was sold to Rosier, of which Elf Aquitaineholds a 57% share, to create a more competitive player in theBenelux market.

Grande Paroisse also unveiled an important plan intended to support its nitrogen derivatives production and announced theconstruction of a new urea plant at Grandpuits as well as a newworld-class nitric acid plant in Rouen. These plants are scheduledto be brought onstream in 2008, concurrent with the shutdown of the fertilizers plant in Oissel and four small obsolete acid nitriclines in Rouen and Mazingarbe.

Grande Paroisse continued to face the consequences of theexplosion which struck its Toulouse plant in September 2001 andmade payments, under the French law presumption of civil res-ponsibility, over and above the compensation paid by insurancecompanies, reaching a cumulative amount approaching 1,227 M€

as of December 31, 2006.

I SPECIALTIESTOTAL’s Specialties sector includes rubber processing(Hutchinson), resins (Cray Valley, Sartomer and Cook Composites& Polymers), adhesives (Bostik) and electroplating (Atotech). The sector serves consumer and industrial markets for which customer-oriented marketing and service as well as innovation arekey drivers. The Group markets specialty products in more than 55 countries. Its strategy is to continue its international expansionby combining internal growth and targeted acquisitions whileconcentrating on growing markets and focusing on the distributionof new products with high added value.

In 2006, the Specialties sector benefited from a generally favora-ble environment and particularly from stronger demand in Europe.In 2006, sales reached 7.10 B€, an increase by nearly 9% compa-red to 2005. The adjusted net operating income from theSpecialties sector increased by 10% in 2006 compared to 2005.

France: the Grande Paroissefertilizer plant at Grandpuits

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CHEMICALS u 55

Rubber processingHutchinson manufactures and markets products derived from rubber processing for the automotive and aerospace industries as well as for consumer markets.

Sales increased by approximately 5% in 2006 compared to 2005.In 2006, the automotive industry sales increased by 4% comparedto 2005 despite a difficult environment in Europe and in the UnitedStates. In 2006, sales from the industrial division increased byapproximately 10% compared to 2005, weaker demand from thedefense industry in the United States was offset by growth fromother segments. Sales from the consumer goods sector increasedby approximately 2% due to higher consumer demand in Europe.

Early in 2006, Hutchinson strengthened its industrial division byacquiring the French company Jehier, a manufacturer of variousinsulating components for the aerospace and defense industries.Throughout 2006, Hutchinson continued to develop in growing mar-kets such as Central and Eastern Europe, South America and China.

ResinsTOTAL produces and markets resins for adhesives, inks, paints,coatings and structural materials through its three subsidiariesCray Valley, Sartomer and Cook Composites & Polymers.

In 2006, TOTAL’s resins activities improved its results, benefitingfrom the favorable environment. Sales grew by approximately 8%in 2006 compared to 2005.

In 2006, Cray Valley decided to de-bottleneck its tackifying resinsplant in Beaumont, Texas, United States, acquired in 2005.Sartomer started the expansion of its photocure plant in Villers-Saint-Paul, France and pursued the construction of a new mono-mers and oligomers plant near Guangzhou, China. Cray Valley pur-sued the streamlining of its resin coatings production in Europeand closed its plant in Tönisworth (Germany), whose production isbeing transferred to other Cray Valley plants in Zwickau (Germany)and Boretto (Italy).

AdhesivesTOTAL’s adhesives subsidiary, Bostik, is one of the worldwideleaders in its sector, based on sales, with leading positions in theindustrial, hygiene, construction and consumer and professionaldistribution markets.In 2006, sales increased by 15% compared to 2005. This increasein sales recorded in 2006 stems partly from acquisitions made inthe second half of 2005 and early in 2006, and partly from healthyglobal economic conditions. The activity was sustained in the Asia-Pacific zone, remained well oriented in the United States and impro-ved significantly in Europe. Nevertheless, margins were negativelyaffected by the increase in the prices of raw materials.

In 2006, Bostik strengthened its position in the construction anddistribution segments by acquiring Sealocrete and Wetherby (UK)and Paso (Germany). Bostik also acquired Pegaso (Mexico) in theindustrial segment and the laminated adhesives activities of DuPont in Germany, as well as purchasing the minority shareholders’shares of ASA (Australia).

ElectroplatingAtotech, which encompasses TOTAL’s electroplating activities, is the second largest company in this market, based on worldwidesales (a).

In 2006, sales grew by approximately 19% compared to 2005.Electroplating activity benefited from the growth of the electronicindustry in Asia and also from strong demand for general metal finishing.

In 2006, Atotech strengthened its general metal finishing activitiesby acquiring the shares of Kunz GmbH (Germany), a companyspecialized in anti-corrosion coating technologies intended forautomotive uses.

Atotech also expanded the production capacity of its Neuruppin(Germany) and Guangzhou (China) plants and commissioned anew industrial complex that combines both manufacturing andtechnical center facilities at Jang-An (South Korea).

France: the powder productionworkshop in the Bostik plant at Sainville

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56 o TOTAL IN 2006

(a) Source: company data.

RESEARCH ANDDEVELOPMENT

I RESEARCH AND DEVELOPMENT COSTS

Research and development challenges for TOTAL can be definedalong four main lines:• knowledge of the resources and their quality, mainly oil and gas,

but also for biomass and renewable energies;• competitiveness, renewal and quality of products, including the

ability to meet market needs, their life cycle and their impacts;• efficiency, reliability and duration of production facilities, notably

their energy output;• environmental challenges with regard to water, air and soil on

production sites, and the future of residual gases such as carbondioxide.

These challenges are addressed in synergy rather than competiti-vely. The approach varies according to the different business segments.

Main focus of business segment R&DExploration & ProductionUpstream R&D has a number of themes, including:• seismic data acquisition and processing;• digital simulation and characterization of reservoirs (such as low

permeability or very deep reservoirs), sour gas processing andchemical conversion of gas;

• oil recovery in operated reservoirs and issues connected toheavy oil recovery are two major concerns which led the Groupto increase the Research budget;

• CO2 capture and geological storage in “depleted” gas reservoirsthe subject of a major new project in France.

Gas & PowerThe main R&D themes concern energy conversion: new technicaloptions for LNG terminals, new processes for GTL (Gas toLiquids), notably including the emergence of DME (Di-Methyl-Ether) production, the Group’s commitment in direct productionprocesses and CTL (Coal-to-Liquids) processes to convert coalinto liquid hydrocarbons. This business segment is also committedin power generation (the means to improve output) and CO2

capture in power plants.For renewable energies, major themes for R&D concern possibleevolutions of photovoltaic technology with the new cell generationand power generation from biomass. TOTAL also entered into a partnership in wave power.

RefineriesFor refining and marketing, TOTAL is preparing to include in itsactivities resources of the future, whether from non-conventionaloil or from first or second biomass generation. TOTAL is also deve-loping new high performance fuels, additives and lubricants adap-ted to the market, car manufacturers and energy. This businesssegment is also developing processes and catalysts, consideredas two major R&D drivers, to improve productivity and reduce environmental impacts.

PetrochemicalsIn Petrochemicals, R&D is directed toward the discovery of newresources from gas, coal or renewable energies and also the impro-vement of the energy efficiency of the facilities, as well as the deve-lopment of new specialized polymers, the products of the future.

SpecialtiesAtotech is part of the rapid global development of microelectronics,dealing with engraving, brasing and electroplating technologies.Hutchinson is innovating in the field of clean production technologiesconnected to thermoplastic products and attractive systems formajor clients.Bostik is focusing its research and innovation program on develo-ping functional adhesives that do more than just assemble partsinto a whole but also offer new properties: better acoustics for building and transport applications and recyclability and compos-tability for hygiene and packaging applications.Bostik and Cray Valley-Sartomer are working on the developmentof new products derived from clean technologies, notably usingbiomass resources.

EnvironmentControlling and reducing the environmental impact of its activitiesis a challenge common to the whole Group, such as the reductionof gas emissions, the reduction of water contamination to complywith the European water framework and the REACH directives, aswell as the reduction of greenhouse gas emission whether throughthe improvement of energy efficiency or efforts leading to carboncapture and sequestration.

R&D organizationTOTAL’s management is considering the Group’s research anddevelopment trends and the optimal organization of the ResearchDepartment to adapt to a new context that requires both a strongresearch in all business segments as well as improved cross-disci-plinary cooperation. Within the framework of a change in the mana-gement, this movement led to a reorganization of this Departmentwhich now reports directly to the Group’s Management.

The Group has 22 major R&D centers worldwide and developedapproximately 500 active partnerships with other industrial groups,university research or special research institutes. In addition,TOTAL benefits from a network of academic scientists worldwidecommitted to scientific watch and analysts useful to the Group’sR&D activities.

RESEARCH AND DEVELOPMENT u 57

CORPORATESOCIAL RESPONSIBILITY

58 o TOTAL IN 2006

CORPORATE SOCIAL RESPONSIBILITY u 59

ETHICS

uu Given the nature and international scope of TOTAL’s activities, we are directlyinvolved in issues relating to our planet’s overall environmental, social and economic equilibrium.The Group is therefore fully engaged in corporate social responsibility (CSR) viaconcrete policies, commitments and targets. Each year, we provide full details of our CSR performance in a special report entitled Sharing Our Energies*.The following pages outline the themes covered by that report.

I BUSINESS PRINCIPLES The principles that guide the Group in its everyday activities are:responsibility, respect for human rights, integrity and transparency.TOTAL has based its policies on key international documents andthe Group makes every effort to ensure that these policies areimplemented.

Commitments based on universal principlesTOTAL’s approach to CSR is based on a Code of Conduct com-municated to Group employees. The Code is the main referencedocument for everyday decision-making and compliance with itsprovisions is closely monitored.The Code emphasizes that TOTAL supports:• the principles of the Universal Declaration of Human Rights;• the Fundamental Conventions of the International Labour

Organization;• the OECD Guidelines for Multinational Enterprises;• the Principles of the United Nations Global Compact.

The Code also defines the Group’s values: “Our core values areprofessionalism, respect for employees, an ongoing concern forsafety and environmental protection, and a commitment to contri-bute to the development of host communities. Our concept of professionalism emphasizes responsibility, accountability, integrityand exemplary behavior”.

CSR: an integral part of TOTAL’s strategyOur commitment to CSR is an integral part of TOTAL’s overall strategy and everyday activities. We pay particular attention toCSR issues when deciding where to do business or to invest. Theyare also taken into account by management of all entities reportingdirectly to the Chief Executive Officer:• the Strategy and Risk Assessment Division (environment, safety,

local development, security and international relations);• the Ethics Committee;• the Human Resources Division.

In addition, basic rules of behavior together with guidelines for theirapplication are disseminated all business units, giving concreteexpression to the commitments made at Group level in the Codeof Conduct.

Human rights: a key challengeTOTAL does business in many countries. Some of themmay not always respect human rights, others may sufferfrom political strife or social unrest, still others mayinvolve security problems. In all cases, TOTAL’s top priority is human rights.The Group strives to ensure that this commitment is put into practice, with particular emphasis on raisingemployee awareness and providing relevant appropriatetraining.

60 o TOTAL IN 2006

* Further information on TOTAL’s 2006 social responsability achievements andpolicy can be obtained by consulting or downloading the Corporate SocialResponsability Report, “Sharing our energies”. www.total.com/csr

INDUSTRIALSAFETY

I MANAGING TECHNOLOGICALRISK

The main thrusts of the Group’s safety strategy are to reduceindustrial risk by means of preventive and protective measures, to integrate urban worksites into their surroundings and to plan for emergency situations so as to limit the consequences of any accidents. TOTAL operates nearly 400 sites worldwide involving high techno-logical risk (as defined by the Seveso Directive for the EuropeanUnion or presenting an equivalent level of risk for sites outside theEU). We apply a unique risk-analysis methodology in order todefine concrete measures for integrating urban sites into their surroundings in compliance with national legislation. Similarly, all sites implement Safety Management Systems and their effecti-veness is regularly audited with the aid of evaluation grids adaptedto each type of activity and recognized by outside bodies.By the end of 2006, 76% of high-risk sites had been audited andwe plan to implement this approach at all sites by the end of 2009.

I IMPROVING WORKPLACESAFETY

TOTAL is committed to reducing even further the frequency andseverity of workplace accidents, whether they involve Groupemployees or contractor personnel.Between 2001 and 2005, we reduced workplace accidents by59% and we have now set new targets for the 2006-2009 period.In 2006, TOTAL recorded 5.1 accidents per million man-hoursworked, so the target set for 2006 – a 10% reduction – has beeneasily exceeded.For oil, gas and petrochemicals operations alone, we recorded a TRIR of 3.4, which ranks TOTAL alongside the five main interna-tional oil companies.We also posted a similar fall in the number of lost-time incidents(LTIR).Thanks to a commitment by both TOTAL employees and ourcontractors, all Group business segments posted encouragingsafety results during 2006.

Number of accidents per million man-hours worked– TOTAL employees and contractor employees

(TRIR: Total Recordable Injury RateLTIR: Lost Time Incident Rate)

— TRIR target � TRIR real — LTIR real

I STRENGTHENING TRANSPORT SAFETY

TOTAL uses a variety of means – road, rail, pipeline, inland water-way, sea – to transport our products from production sites toplants and refineries and from there to end users.Whatever the mode of transport used, our risk management isalways based on the same principles:• risk analysis;• development and audit of safety management systems;• maximum integration of accident feedback;• rigorous selection and inspection of equipment;• certification of transport chain participants.

Given that road accidents account for such a large proportion (nearly80%) of TOTAL’s industrial accidents as well as a similarly high pro-portion, in recent years, of fatal accidents, we have now decided toimplement specific road-transport risk plans in all Group entities. Themain thrust of these plans is additional road-safety training for bothTOTAL employees and the employees of our logistics contractors.

A safety awareness program u

uu At TOTAL, the safety of people and property is a major concern in theconduct of our business. The industrial risks we face are related to the productswe manufacture or use in our processes as well as to actual industrial operationsand transportation.

ETHICS - INDUSTRIAL SAFETY u 61

uu The principles underlying human resources management at TOTAL are non-discrimination, promotion of diversity and equal opportunity, ongoing employeedialogue and skills development. These objectives guide all the efforts of theGroup and its subsidiaries to attract, motivate and retain the talented men andwomen we need to expand geographically and rise to new energy challenges.

I A POLICY OF NON-DISCRIMINATION

Helping all of the Group’s 95,000 employees to achieve equitablecareer advancement is one of TOTAL’s top priorities, and theGroup’s main career-management tools are applied in all countrieswhere we operate. By the end of 2006, 78% of managerial (or equi-valent) positions had been evaluated using the Hay method and98% of Group companies had set in place a system of annualassessment interviews. TOTAL also emphasizes non-discriminationin its policy on remuneration and social benefits, and in 2006 we formally strengthened employee life insurance coverage so that it now amounts to at least two years gross salary. Some 72% ofemployees now benefit from decease cover at the standard level (a).

I PROMOTING DIVERSITY ANDEQUAL OPPORTUNITY

During 2006, TOTAL continued its efforts to promote nationalityand gender diversity at managerial level, while also encouraging allother facets of diversity: non-discrimination, employment of disa-bled workers and recruitment of local staff in all countries wherewe operate. Recruitment, one of the main pillars of TOTAL’s diver-sity drive, made a significant contribution to our progress in thisarea in 2006. For example, the proportion of women among newrecruits (managerial positions, permanent contracts) stood at 26%,compared to 20% in 2003. And as TOTAL increases its internatio-nal scope, so its recruitment becomes more international too: in2006, 68% of new recruits (managerial positions, permanentcontracts) were non-French nationals and 95% of them wererecruited outside France. In terms of our consolidated scope,TOTAL boasts employees of 130 different nationalities.

I FOSTERING EMPLOYEE DIALOGUE

With 151 new collective agreements concluded during 2006,TOTAL has clearly demonstrated its desire to bolster the role playedby employee representatives in decisions affecting the Group. This year, the agreement on the European Social Platform (b) led to the publication of our first set of social tracking indicators cove-ring 10 countries and more than 50 subsidiaries in Europe. Thisreport, which outlines all Group initiatives in the areas of employee dialogue, management of skills/employment needs, restructuringand equal opportunity, is a major step forward in the collaborativedetermination of tracking indicators.

I ENHANCING EMPLOYEESKILLS

Faced with new challenges – increasingly complex projects, a changing energy context and the need to expand geographically– TOTAL must ensure that its employees acquire the necessaryskills to meet these challenges.The Group strives to ensure that all employees receive the trainingthey need, throughout their career. This may include training in technical and managerial skills, refresher courses, exchanges of experience, seminars on Group values… In 2006, TOTALemployees received on average 4.6 days of training.

(a) At constant scope, cover is up 3% compared to 2005.(b) Additional information on this agreement is available on the Group’s internal site.www.total.com/csr

HUMAN RESOURCES

France: overseas students attending courses at the TOTAL university in Bougival

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France: students from the grandes écolesattend a careers information session

organized by the Group

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62 o TOTAL IN 2006

I LOCAL DEVELOPMENT INNON-OECD COUNTRIES

TOTAL has a strong presence in non-OECD countries and is keenon contributing to their socio-economic development. The three vectors of our effort here are: encouraging transparency regardingthe taxes and production royalties paid by oil companies to hostgovernments; expanding “local content” of projects (local jobs andprocurement); and setting up socio-economic programs for localcommunities.

Ensuring greater transparency of oilrevenuesNearly two thirds of TOTAL’s production comes from non-OECDcountries, and we feel that revenues from the extractive industriesshould make a greater contribution to alleviating poverty and fostering sustainable development in these countries. Since 2002we have supported the Extractive Industries Transparency Initiative(EITI), whose aim is to encourage better governance and the trans-parency of oil and mining revenues in countries that depend on natural resources. EITI brings together representatives ofgovernments, oil/mining companies, international financial bodies,investor associations, NGOs and professional organizations.

Fostering development of tade andindustry in host countriesTOTAL’s local content policy is aimed at greater use of local personnel and industrial facilities in carrying out its projects. This increases the positive spin-off for trade and industry in termsof employment, skills development and technological expertise.The Group has been pursing this policy for more than ten yearsnow. Local-content programs are developed on a case-by-casebasis, according to the technical characteristics of the project andthe local industrial base. At project planning stage, a study is carried out of all resources (skilled labor, facilities) available locally.In trying to boost local content, TOTAL often comes up against a

lack of skilled labor and technological expertise, meaning thatefforts must be made early on to train local operators and transfertechnology to local contractors.

Partnering the socio-economic development of local communitiesIn non-OECD countries, TOTAL sets up socio-economic aid pro-grams so that local communities can benefit from our presence interms of human development. Community programs can involve arange of areas – health, education, vocational training, micro-credit – depending on local needs.The guiding principle of TOTAL’s initiatives in this area is partner-ship. The projects that we support are always defined in consulta-tion with the local authorities and representatives of surroundingcommunities, and the local people are always made responsiblefor project execution.This strictly defined role-sharing ensures the legitimacy of TOTAL’scontribution to socio-economic and health programs, which arenaturally the prerogative of host countries themselves. It is also thebest guarantee of success for projects that require both technicalexpertise and knowledge of the local culture, customs and needs,knowledge that Group employees do not necessarily possess. The success of community projects is also encouraged by theempowerment of local players, thus reducing their dependence on TOTAL’s presence.The latest version of the Code of Conduct is available in 16 languages,including 2 dual-language versions.

Angola: the Group supportscommunity projects focusingon health

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Philippines: TOTAL helps the Bantay-Bata Center tolook after children in difficulty

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LOCAL DEVELOPMENT

HUMAN RESOURCES - LOCAL DEVELOPMENT u 63

* Further information on TOTAL’s 2006 social responsability achievements andpolicy can be obtained by consulting or downloading the Corporate SocialResponsability Report, “Sharing our energies”. www.total.com/csr

ENVIRONMENT64 o TOTAL IN 2006

uu The desire to produce without damaging the environment is one of TOTAL’soperational priorities. This is not just one of our fundamental business principlesbut it also represents an opportunity to optimize our practices and processes.

I CERTIFYING ENVIRONMENTALPERFORMANCE

TOTAL continues to extend implementation of its EnvironmentalManagement System, and by the end of the year, 223 of our work-sites had gained ISO 14001 certification. This corresponds to 74%of our environmentally-sensitive sites (i.e. 132 sites). In line with the principles of openness and dialogue set out in TOTAL’s Health,Safety, Environment and Quality (HSEQ) Charter, the Group responds to requests from non-financial rating agencies. On itsown initiative, TOTAL has also asked its Statutory Auditors to signoff on certain indicators included in its environmental reporting.

In addition, we are gradually extending across the Group our in-house Environmental Risk Evaluation (ERE) methodology, whichhas proved particularly useful for identifying priority action areas at worksites.

I COMBATING CLIMATECHANGE

While continuing to expand our business activities, TOTAL iscontributing to the global reduction in greenhouse gas (GHG)emissions. Our action plan includes:• improving our reporting of emissions data;• reducing GHG emissions by Group sites and by our customers;• optimizing the energy efficiency of our products and processes

by means of keynote initiatives, such as stepping up efforts toreduce gas flaring (a) at facilities operated worldwide by our E&Psegment (target: a 50% reduction by 2012);

• securing the future of energy via renewable energies, hydrogenfuel-cell development, R&D programs on new industrial equip-ment and processes that generate fewer emissions, and involve-ment in development of new technologies like the capture andgeological sequestration of CO2.

TOTAL is also taking part in the climatechange debate at national and internatio-nal level and is helping to finance scientificexpeditions in this area. One example isthe expedition to the North Pole in April2008 to be led by explorer Jean-LouisEtienne, which will carry out thicknessmeasurements on the sea ice.

France: the Prime G unit at the Flandersrefinery (Dunkirk)

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(a) When oil is produced, it is always accompanied by associated gases that are not easyto store and then export. When they cannot be either consumed on-site or valorized, thesegases are usually flared, i.e. burned off.

Notes to p.65(a) Combustion without nitrogen, where air is replaced by pure oxygen so as to obtain acombustion gas with a very high CO2 content.(b) Parts per million.(c) France’s Center for Research on Marine Pollution. (d) Bureau of Geological and Mining Research.(e) See the chapter on Corporate Philanthropy, pp 70-71.

Argentina: sorting waste for disposal atAguada Pichana

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I CO2 CAPTURE AND STORAGE

TOTAL is helping to develop and perfect techniques for capturingand sequestering CO2. Indeed the Group was an early player in thisarea, which is a promising vector for reducing GHG emissions.Following preliminary studies, in early 2007 we launched a first pilotproject at our Lacq site in southern France. The pilot, which coversthe whole process from capture to geological storage of CO2,including steam production facilities, is expected to start operatingin 2008. Over a period of two years, it will generate up to 150,000metric tons of CO2, which will be captured and stored. The role ofthe pilot is to demonstrate the large-scale feasibility of oxycombus-tion technology (a), which could reduce CO2 emissions by 50% andlower storage costs by a similar proportion, compared to existingtechnologies. TOTAL is also a partner in a number of other industrial demonstrationprojects worldwide and is playing an active role in R&D in this area.

I ENVIRONMENTAL STEWARDSHIP

Improving air qualityAs regards other emissions, particularly sulfur dioxide (SO2), nitro-gen oxide (NOX) and volatile organic compounds (VOC), TOTAL isfocusing its efforts on reducing all gaseous emissions likely todegrade the quality of the air (pollution, health hazard, unpleasantodor…) in the vicinity of Group worksites.A number of measures have been implemented to decrease theseemissions and to improve emissions reporting: better meteringmethods, emissions reduction campaign, modifications to plantand equipment, vapor-recovery apparatus, improved pipelinemaintenance, etc.

Conserving waterTOTAL continues with its efforts to reduce water consumption atworksites by means of specific action plans for different industrialsegments and types of site. During 2005, six pilot sites operated by different business seg-ments ran studies on potential water conservation, and the feed-back here was analyzed and compiled into a methodological guideto be published in 2007. This guide will help all Group sites todefine and achieve water-conservation objectives.

We also continue to improve the quality of water discharged by ourfacilities. A program carried out by the Exploration & Production

ENVIRONMENT u 65

segment between 2000 and 2005 has already led to a reductionof more than two thirds in the hydrocarbon content of dischargedwater. The target for 2007, maximum content of 30 ppm (b), is expected to be reached shortly by all E&P subsidiaries.

Consolidating marine and waterway pollution prevention and responseresourcesWith Corapol (c),which brings together about 30 in-house pollutionspecialists, the Group has a team specifically trained to respond toaccidental pollution.

Reducing and valorizing wasteWhen collecting and treating waste from our worksites – whetherthis is done in-house or by outside contractors – traceability is ahigh priority for TOTAL. Right from the design stage, all our deve-lopment teams adopt the full-life-cycle approach in developinglow-impact products and processes that will generate less waste.

Rehabilitating industrial sitesTOTAL pays close attention to the rehabilitation of its industrialsites, thinking ahead about restoration even while the site conti-nues to operate and rehabilitating sites for other uses once facili-ties are decommissioned.In both cases, we try to ensure that the sites no longer involve anyrisk for humans or the environment. Together with our partnerBRGM (d), we have now launched a project called Remtec+ torehabilitate polluted soils. The aim of the project is to graduallydevelop an in-house soil remediation referential, to harmonize theactions of the Group’s different business entities and to work out acommon approach based on feedback from about 30 rehabilita-tion programs either completed or still under way.

I SAFEGUARDING BIOLOGICALDIVERSITY

TOTAL has adopted a systematic approach to the conservation ofbiodiversity at and in the vicinity of its worksites. We made a com-mitment to this effect via a guide to practical methodology publi-shed in 2005, and since autumn 2006 this methodology has beentested at three pilot sites.At the same time, the Group finances biodiversity projects (e) via theTOTAL Corporate Foundation for Biodiversity and the Sea, set upin 1992.

THE FUTURE OF ENERGY

South Africa: manufacturing solar panels(Tenesa)

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uu If we are to secure our energy future we must satisfy growing energydemand while also combating climate change. TOTAL’s approach here is to diversify energy supply while also promoting energy efficiency.

I FOSSIL FUELS: OPTIMIZING RESOURCES

TOTAL continues to focus on developing new techniques for iden-tifying and recovering oil and gas resources so that we can replaceour reserves (our reserves renewal rate (a) stood at 127% at the endof 2006), optimize production from mature fields and valorize non-conventional hydrocarbons. The Group is one of the world leadersin deep-offshore operations and is particularly well placed in WestAfrica; during 2006 we started production on the Dalia field, one ofthe largest deep-offshore projects in the world. TOTAL also haslarge-scale projects producing extra-heavy crude.In Venezuela, the Group is a partner in the Sincor project, which isnow producing 180,000 barrels per day of high-quality, syntheticcrude. And in Canada, we continue to work on two projects thatare developing ways to produce the tar sands of Athabasca,where TOTAL has a 50% stake in the Surmont permit and 84% ofthe Joslyn permit. Our Group has also built up a very strong position in natural gas,which accounts for a growing share of our portfolio: about 40% ofour hydrocarbon reserves and a third of our overall production. In2006, the Group produced 48 billion cubic meters of gas throu-ghout the world.

TOTAL is today a leading player in the liquefied natural gas (LNG)segment. Upstream, we have interests in six liquefaction plants,and in 2006 the Group finalized arrangements for its partnership inQatargas II, which will be the largest LNG scheme in the world.

Downstream, we have either a partnership stake or rights to regasification capacity in five LNG import terminals, including theAltamira facility in Mexico, which became operational in 2006. The same year, TOTAL also began operating the first LNG carrier to be directly chartered by the Group.

TOTAL has also been a coal producer and marketer since the early1980s and currently operates three collieries in South Africa. Our annual production of 3 million metric tons is mainly marketed inEurope, where it is used for power generation. In 2006, the Groupmarketed 9.5 million metric tons of coal throughout the world.

I RENEWABLE ENERGIES: TARGETED DEVELOPMENT

In the field of biomass, a multi-purpose energy source that can be used to provide heat, electricity, gas or liquid fuel, TOTAL isworking to identify the valorization vectors that are most relevant toour core businesses. As the leading European player in the biofuelssegment, we are working on two first-generation fuels – ethyl-ter-tio-butyl-ether (ETBE) and vegetable oil methyl ester (VOME).The Group currently blends some 900,000 metric tons of thesebiofuels into the motor fuels it sells in Europe, and we are activelyworking to enhance their valorization so as to keep pace withstrong growth in demand and rapidly changing specifications (new biodiesel bases, motor fuels with high ethanol or biodieselcontent). At the same time, TOTAL is also looking ahead to the development of second-generation biofuels, which will complement the various biofuels already available by broadeningthe range of bio-resources used in their manufacture while alsoimproving the overall environmental impact.(a) 20.5 billion boe if the figure is limited to the proved and probable reserves covered by

contracts signed by TOTAL Exploration & Production and involving fields already drilled andwhere technical studies have showed that development will be economical in a context ofBrent at $40 per barrel. Also included is the Group share of Joslyn production using miningtechniques.

66 o TOTAL IN 2006

In solar power (silicon-crystal technology), TOTAL manufacturesphotovoltaic cells (Photovoltec), solar panels and designs solarsystems (TENESOL). The Group is also involved in financing projects for rural electrification (Temasol in Morocco and KES inSouth Africa).

In January 2006, TOTAL increased its interest from 42.5% to 47.8% in Photovoltech, a company specialized in manufacturingphotovoltaic cells. Photovoltech sales rose to approximately 44 M€ in 2006, from 25 M€ in 2005. Due to strong demand for and the successful marketing of its products, Photovoltech is planning to increase its total production capacity from 20 MWp/yto 80 MWp/y by the end of 2007. Civil engineering for the new production facilities to increase capacity began in the fall of 2006.

TOTAL holds a 50% interest in TENESOL, its partnership with EDF,which designs, manufactures, markets and operates solar-photo-voltaic power systems. TENESOL’s consolidated sales decreasedby approximately 8% between 2005 and 2006, amounting toapproximately 134 M€ in 2006, compared to 145 M€ in 2005,the equivalent of an installed capacity of 33 MWp. Its principalmarkets are for network connections in Europe (Germany andSpain) and for decentralized rural electrification and telecommuni-cation systems in the French Overseas Territories. TENESOL ownstwo solar panel manufacturing plants: TENESOL Manufacturing inSouth Africa, with an annual production capacity of 35 MWp, andTENESOL Technologies in the region of Toulouse, France, with anannual production capacity of 15 MWp.

TOTAL is pursuing decentralized rural electrification activities byresponding to call for tenders from authorities in several countries,including Mali, Morocco, Senegal and South Africa.

In South Africa, an ongoing project to equip 15,000 households,led by Kwazulu Energy Service Company (TOTAL, 35%), hadequipped nearly 9,000 households by the end of 2006.

In Morocco, Temasol, in which TOTAL has indirect intereststhrough Total Maroc (32.2%) and TENESOL (35.6%), continuedwork on a project awarded in May 2002 to equip 16,000 house-holds. In 2004, Temasol was also awarded a project to equip37,000 households. In 2005, it was awarded part of a project toequip an additional 5,500 households. At the end of 2006,approximately 24,000 of the total of 58,500 households coveredby these projects were equipped, compared to 20,000 at the endof 2005 and 10,000 at the end of 2004.

TOTAL has also confirmed its interest in marine-power (generationusing the motion of waves and tidal streams) by becoming a partner in R&D projects in Spain and Scotland.

I NEW ENERGY VECTORS:FOCUSING ON CREATIVITYAND INNOVATION

TOTAL is a partner in a number of R&D programs focusing onliquid hydrocarbons that could become viable alternatives toconventional motor fuels. Promising options here could be to drive a synthetic intermediategas from natural gas (GTL technology), from coal (CTL) or frombiomass (BTL) and then transform it into liquid fuel such as dieselor aviation fuel (kerosene).The Group is also involved, via an active partnership-orientedresearch policy, in development of hydrogen fuel-cell technologyfor both stationary and automotive applications. Two public hydro-gen filling stations are already operating in Germany.

I ENERGY EFFICIENCY: POTENTIAL GAINS

For us at TOTAL, it is essential to improve energy efficiency at ourindustrial sites if we are to curb greenhouse gas emissions andreduce production costs, and thus meet the expectations of civilsociety. The Group is working to improve the energy efficiency of all itsindustrial sites (refineries, petrochemical plants, oil and gas pro-duction sites), modifying plant and equipment and implementingother energy-saving measures. We are also implementing cogene-ration schemes, refining valorization projects and oil-product qua-lity enhancement programs such as Clean Fuel.At the same time, TOTAL strives to offer customers environment-friendly products and services that result in energy saving, whilealso encouraging all citizens to rationalize their energy consump-tion for both household and transport needs.

(a) A 50-50 joint venture between TOTAL and France’s power utility EDF.(b) A joint venture with Electrabel and the Independent European Center for ElectronicsResearch (IMEC). In 2006 TOTAL was a 47.8% partner.

France: the Mardyck wind farm on the site of the Flanders refinery (Dunkirk)

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THE FUTURE OF ENERGY u 67

CORPORATEFOUNDATION

68 o TOTAL IN 2006

uu The TOTAL Corporate Foundation for Biodiversity and the Sea, which wasset up in 1992, is an expression of the Group’s commitment to the environmentand, more particularly, the conservation of biodiversity. The main thrusts of the Foundation’s action are to gain a better understanding of our planet’s ecosystems, particularly marine ecosystems, and to help restore damaged areas and safeguard endangered species. The Foundation also devotes part of its budget to educational and awareness programs on the environment.

SantoSanto 2006 is a scientific expedition initiated by France’s NationalMuseum of Natural History, the Institute for Research onDevelopment and Pro-Natura International. The purpose of theexpedition is to draw up an inventory of flora and fauna in terres-trial and marine milieus on the island of Santo. This is one of themain islands of the Vanuatu archipelago, which includes a dozenlarger islands and about 80 smaller ones.

From early August until December 2006, some 170 scientists from25 countries took turns working on Santo as part of the studyexpedition.The Foundation provided support for the “Marine Biodiversity”module of this project, which focused on an inventory of local mollusks and decapod crustaceans. The project was presented atthe “France – Oceania Summit” held in Paris on 26 June 2006,under the patronage of the French president.

REBENTBetween 2002 and 2006, the Foundation has been one of themain supporters of the program to set up the REBENT monitoringsystem (from the French REseau BENThique - benthic network),intended to supplement the marine environment surveillance net-works already operating around the French coastline. The aim ofREBENT is to acquire relevant and coherent knowledge of coastalbenthic habitats and to set up an ongoing monitoring network ableto detect medium and long-term changes in these habitats, withparticular emphasis on biological diversity. Brittany was selectedas the pilot region for the initiative.

Actions currently under way involve about 15 scientists in anygiven year. Present programs involve about 50 days per year ofsurvey campaigns aboard oceanographic vessels, airborne sur-veys, satellite data acquisition, numerous survey trips in smallboats, about a hundred dives and several dozen days of surveywork on foot in intertidal zones.

I HIGHLIGHTS OF THE 2006PROGRAMME

Perros Guirec Seminar on SeabirdConservationAs part of its ecosystem rehabilitation program, the Foundationsupports a number of seabird conservation initiatives. This was thetheme of a seminar organized by the Coastal Protection Agency inconjunction with the Foundation. The seminar was held in theBreton town of Perros Guirec on 16-17 October 2006.

Scientists and managers of nature reserves took advantage of theoccasion to share their experiences and compare their approa-ches in an effort to enhance overall knowledge and managementof seabird colonies.

In 2002, the Coastal Protection Agency launched an initiative torehabilitate seabird nesting sites on small Breton coastal islands.The aims of the program were to enhance the reproduction condi-tions of certain seabird species and to set up a chain of smallislands offering an attractive nesting environment.

The TOTAL Corporate Foundation provided financial support forthis program, which was in line with a number of its other seabirdprojects in Europe. In 2006 the Foundation launched another pro-ject, this time in partnership with Heriot Watt University(International Centre for Island Technology), involving analysis ofthe underwater behavior of seabirds and the use of sensors tostudy the signals they emit at the moment when they dive. TheFoundation is also supporting another seabird project in theBarents Sea, in partnership with the Norwegian Polar Institute inTromsø and France’s National Scientific Research Center (CNRS).

discipline workshop for long-term study and observation, for thebenefit of both the scientific community and the general public.The program will focus on:• study of the diversity of marine and coastal species as well as

those living in a coral reef milieu;• construction of a database of marine and coastal biodiversity

with a view to putting together a reference collection of existingmarine and coastal organisms;

• creation of a marine education center for students, school-teachers and others.

Total Pacifique - Study of humpbackwhales / Opération CétacésAs part of its commitment to protecting and valorizing the lagoonaround New Caledonia, the Foundation has been providing support for an association called Opération Cétacés (OperationCetaceans), which is carrying out a study of the humpback whales that come to the lagoon each year in July-September tomate. The project began in July 2006 and is due to be completedby the end of 2008.The study also includes an eco-tourism aspect (evaluation of theimpact of “whale-watcher” boats on humpback whales in a repro-duction zone) and an educational side (a marine mammal aware-ness campaign, mainly aimed at school children).During the two observation campaigns organized in July-September 2006, 136 groups of whales were observed, including70 new individuals, bringing to 428 the total number of whalesobserved around New Caledonia.

I EMPLOYEE PROJECT

Provence Refinery - A heritage trail inGramboisAn association called “The Friends of the Jas de Monsieur”, set upto safeguard local heritage (traditional rural architecture, crafts andlifestyle) in the Luberon region, has launched an initiative to restorethe country paths that are gradually disappearing from the ruralenvironment and being replaced by roads and highways. The immediate aims of the project are: to restore a heritage trail ina typical Luberon region village; to enhance visitors’ understandingof and respect for the local heritage; and to foster exchanges between the various stakeholders exploiting (craftspeople and farmers) and visiting (tourists, hikers, schoolchildren) the area.

Thailand: coral in the Khanom- Mu Koh Tale Tai MarineNational Park

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France: an aerial photo of seagrassbeds in the Glénans archipelago

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CORPORATE FOUNDATION u 69

Comparative analysis of recent and archived mapping imagery hasnow allowed specialists to study the spatial dynamics of plant lifein intertidal zones. More localized monitoring of biodiversity wasset in place at selected sites involving remarkable and/or particu-larly representative habitats. In cross-tidal zones, these habitatsusually include fine sediments, vegetation beds and certain typesof rocky zones. In very shallow water (0 to 40 meters), they usuallyinvolve fine sand, maerl banks and rocky seabeds, and these aremonitored using divers. Monitoring stations are located all alongthe coast and samples are taken from each habitat at regular inter-vals in accordance with an appropriate protocol.

The considerable amount of data being accumulated will be ofgreatest value in the medium and long term. Early results, basedon knowledge already acquired about the groups and successionof species, have already allowed scientists to define qualitative andquantitative indicators for monitoring the ecological condition offine-sand zones.

The desire to ensure wide diffusion of the program results led tothe decision to set up a dedicated REBENT website where all inte-rested parties (scientists, environmental managers and the generalpublic) can access all documentation (technical sheets, studyreports, and in the near future monitoring bulletins) as well as allnew maps and satellite images processed using dynamic mappingtools (www.rebent.org).

I GROUP SUBSIDIARY PROJECTS

Total E&P Thailand – Research program on marine biodiversityThailand is renowned for its high biodiversity. Recognizing the impor-tance of maintaining that biodiversity, the country’s BiodiversityResearch and Training (BRT) Program launched a biodiversity studybased in Khanom Beach-Thal-Tai Islands Marine National Park. An agreement between the Foundation (which is supporting thestudy), the subsidiary and the BRT was signed in February 2006 in the presence of President Chirac of France.The aims of the study program are to assess the biodiversity present in Khanom National Park and to use the park as a multi-

Vanuatu: Marginella (Cystiscidae),an inventory of mollusks duringthe Santo 2006 expedition

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CORPORATE PHILANTHROPY

… and providing ongoing internationaltraining for Chinese emergency medicalstaff As part of its preparation for the 2008 Olympic Games, the Beijingmunicipal authorities have decided to improve the organization of their emergency ambulance service, using France’s SAMU system as a model. The program, launched in 2004, is activelysupported by TOTAL. The main vector for Group support has beento provide about 30 scholarships over three years to enable youngChinese doctors from ambulance teams to go to France for one-year specialist courses in emergency medicine at French teaching hospitals.

In France: supporting educational initiatives…After launching a partnership with the Association for EffectiveSchooling (APFEE) in 2005, TOTAL decided to increase its finan-cial aid to the association to €300,000 in 2006, thereby becomingits main private sponsor. The APFEE, which is committed to com-bating illiteracy, offers those municipalities that desire it a helpinghand for children in the early years of primary school having difficulty learning how to read and write.Also in 2006, TOTAL agreed to join a number of other corporatesponsors in helping to fund an experimental project launched bythe Paris Institute for Political Studies in high schools in the Parissuburb of Seine-St Denis.

…and helping disadvantaged youngs-ters achieve social integrationVia sport. In 2006, TOTAL continued to partner the Le Havre foot-ball club and its parent association Havre Athletic Club (HAC). The club runs a youth program called “HAC mon parrain” (literally:HAC my godfather), designed to forge social ties using football asa vector. The initiative gives about 400 youngsters, both boys andgirls, from various neighborhoods of Le Havre a chance to playsport with proper organization and training.

I COMMUNITY SUPPORT

Launching of an international programfor employees to support communityprojectsIn response to a growing desire by Group employees to be moreclosely involved in general-interest initiatives, in 2006 TOTAL set upan international program to provide financial support for commu-nity projects (health, education, humanitarian causes) suggestedby employees. The budget allocated to this program in 2006amounted to €200,000, with a maximum of €5,000 per project.Employees proposing projects for support must be members ofthe association managing the project and their involvement mustbe personal and voluntary.During 2006, 55 employee projects were approved for support,half of which were in Africa.

Improving public health: continuing the partnership begun in 2005 with the Pasteur Institute…In autumn 2005, TOTAL and the Pasteur Institute signed a 5-yearpartnership agreement aimed at strengthening the scientific and human resources devoted to combating infectious diseases.The partnership has two thrusts.Firstly, TOTAL is providing funding of €2.5 million for research programs carried out by multi-discipline international PasteurInstitute teams. Secondly, in order to foster international cooperation, the PasteurInstitute is making available its expertise and knowledge of thehealth problems experienced in developing countries to assistTOTAL and its local subsidiaries in non-OECD countries where theGroup operates in setting up training programs for medical andpara-medical staff in the prevention, diagnosis and treatment of infectious diseases, particularly sexually-transmitted infections.2006 saw the first concrete results of this partnership: in Angola,about a hundred health workers attended training courses in Luanda set up in conjunction with the local bureau of WHO.

uu In parallel with its industrial activities, TOTAL implements programs designedto stimulate economic and social development in communities living near its worksites. In line with its commitment to corporate social responsibility andsustainable development, the Group also pursues an active policy of philanthropywith three main thrusts: the environment via TOTAL Corporate Foundation for Biodiversity and the Sea, community support and cultural heritage.

70 o TOTAL IN 2006

Via music & dance. In 2006 TOTAL once again provided supportfor the “Ten months of School and Opera” educational and cultu-ral programs run by the Paris Opera. The scheme is mainly aimedat students at schools in disadvantaged areas.The Group also supports the initiatives taken by the Pau-Pays deBéarn regional orchestra to interest youngsters in music.

I CULTURAL HERITAGEIncluding patronage of cultural activities in its corporate philan-thropy program, TOTAL has a number of aims:• to assist major cultural bodies to carry out their projects and to

ensure that large numbers of people benefit from them;• to valorize disciplines related to the Group’s own activities:

TOTAL backs archaeological digs in the Middle East and provi-des significant support for the Paris Natural History Museum’smineralogy program;

• to play a role in culture and tourism in the main regions of Francewhere the Group has worksites.

TOTAL partners the Louvre MuseumAfter financing the Louvre’s restoration of the Apollo Gallery, TOTAL isnow contributing €4 million to enable the museum to set up a newDepartment of Islamic Art. Only a small proportion of the Louvre’sprestigious collection of Islamic art is currently on display, but theentire collection will soon be housed in a new display space in theCour Visconti. During 2006, the facades of the Cour were restored.The new department is expected to be opened to the public in 2009.

Support for temporary exhibitions As a regular partner to the Paris Arab World Institute, TOTAL wasthe exclusive sponsor of the “Venice and the Orient” exhibition thatran from October 2006 to February 2007. The theme of the exhibition was the intercultural dialogue generated by the multiplecontacts forged down through the centuries between the city of the Doges and the most powerful Islamic dynasties. The Group also provides support for exhibitions in France’s variousregions. One of these was “Cézanne en Provence”, on displayduring summer 2006 at the Granet Museum in Aix-en-Provence.The exhibition was jointly organized by the museum, the Aix muni-cipal authorities and the French Museums Board as part of thenational celebrations to mark the centenary of the painter’s death.The exhibition, the highlight of Cézanne Year in France, attractedmore than 400,000 visitors.Organizers of both exhibitions ran special guided tours for TOTALshareholders and employees.

Wide ranging partnership with France’sHeritage Foundation2006 was the first year covered by the 3-year sponsorship agree-ment signed in 2005 between TOTAL and the HeritageFoundation. This foundation is an independent, private non-profitorganization whose aim is to help safeguard and valorize thenation’s heritage, with particular emphasis on sites not protectedby the State as historical monuments. TOTAL is committed tocontributing some €8 million over the period 2006-2008, with theprovison that the funds be used for industrial or arts/crafts sitesdeemed to have cultural or tourism value and located in the mainregions where TOTAL operates worksites.By the end of December 2006, 16 projects had been approved forsupport in a number of regions: Île-de-France, Midi-Pyrénées,Aquitaine, Pays-de-Loire, Rhône-Alpes, Provence-Alpes-Côted’Azur and Lorraine.

France: TOTAL is helping to restore theramparts of the town of Lectoure (Gers)

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France: the Cézanne exhibition in Provence

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Angola: a training program for healthworkers in Luanda

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CORPORATE PHILANTHROPY u 71

SHAREHOLDERNOTEBOOK

72 o TOTAL IN 2006

SHAREHOLDER NOTEBOOK u 73

uu 2006 saw two major operations. On May 18, shareholders received Arkemashares and the TOTAL S.A. share par value was split by four. The Group launched an appropriate communication campaign to provide shareholders with full information on the timetable and other details of these operations.

Largest capitalization on the Paris Bourse and theEuro zone as of December 31, 2006 LARGEST COMPANIES BY MARKET CAPITALIZATION (in B€)

TOTAL 132.6

ENI 102.1

EDF 100.6

Sanofi-Aventis 95.0

Santander Central Hispano 88.4

Change in stock prices in Europe compared tomajor European oil companies between January 1, 2006 and December 31, 2006*

TOTAL (euro) (a)

BP (pound sterling)

RoyalDutchShell A(euro)

RoyalDutchShell B(euro)

ENI(euro)

+ 4.4%+ 3.6%

+ 8.7%

- 8.3% - 1.6%

* in local currency(a) In order to take into account Arkema’s spin-off and the four-for-one stock split, EuronextParis defined an adjustment of TOTAL’s historical stock price. Therefore, TOTAL’s stockprice before May 18, 2006 was multiplied by a 0.9871 adjustment coefficient (based onTOTAL’s 210 euros closing price on May 17, 2006 as well as Arkema’s reference stockprice (before quotation) of 27 euros)) and by 0.25. These adjustments, defined by Euronextare taken into account in the stock price evolution calculation of this chart.

Change in stock prices in the United States compared to major oil competitors betweenJanuary 1, 2006 and December 31, 2006*

TOTAL (b) ExxonMobil

BP RoyalDutchShell A

RoyalDutchShell B

Chevron ENI ConocoPhillips

+ 15.7%

+ 36.4%

+ 4.5%

+ 15.1%

+ 10.3%

+ 29.5%

+ 20.6%+ 23.7%

* in dollars(b) In order to take into account Arkema’s spin-off and the ADR’s split by two, the New YorkStock Exchange (NYSE) defined an adjustment on TOTAL ADR’s historical stock price.Therefore, TOTAL’s stock price before May 23, 2006 was multiplied by a 0.9838 adjust-ment coefficient (based on TOTAL ADR’s 130.4 dollars closing price on May 22, 2006 as well as Arkema’s OTC closing price on May 18, 2006 of 42.15 dollars) and by 0.5.These adjustments, defined by the NYSE are taken into account in the stock price evolu-tion calculation of this chart.

74 o TOTAL IN 2006

Market Capitalization as of December 31, 2006132.6 B€174.5 B$

Percentage of float: 100% (Eurolist by Euronext™)

Par value: 2.50 euros (after the four-for-one stock split on May 18,2006)

Credit rating as of December 31, 2006 (long term/short term/outlook)Standard & Poor’s : AA/A1+ / StableMoody’s : Aa1/P1/Stable

TOTAL share fact sheetExchangesParis, Brussels, London and New York

CODES

ISIN FR0000120271

Reuters TOTF.PA

Bloomberg FP FP

Datastream F: TAL

Mnémo FP

Included in the main indices:CAC 40, DJ Euro Stoxx 50, DJ Stoxx 50, DJ Global Titans

Included in the main sustainable development andgovernance indices:DJSI World, DJ STOXX SI, FTSE4Good, FTSE ISS CGI, ASPI

Weight in indices as of December 31, 2006:CAC 40 13.0% 1st positionDJ EURO STOXX 50 5.9% 1st positionDJ STOXX 50 3.8% 3rd positionDJ GLOBAL TITANS 2.2% 15th position

Source: Bloomberg for other companies.

US$

€

Four-for-one stock splitThe General Meeting of Shareholders of May 12, 2006 decided tosplit the TOTAL share par value by four, effective as of May 18,2006. Consequently, on May 18, 2006, each shareholder receivedfour new TOTAL shares, par value 2.50 euros per share, for eachold share, par value 10 euros per share.

— EURO STOXX 50(indexed on TOTAL share price)

— TOTAL — CAC 40(indexed on TOTAL share price)

Source Datastream - Price as at December 29, 2006: 54.65 euros.

(a) See (a) on the previous page.

SHAREHOLDER NOTEBOOK u 75

TOTAL share price (in euros) in Paris (2002-2006) (a)

I SHARE PERFORMANCE

— TOTAL — DOW JONES(indexed to the TOTAL ADR price)

Source Datastream - Price as at December 29, 2006: 71.92 $.

(b) See (b) on the previous page.

TOTAL ADR price (in dollars) in New York (2002 – 2006) (b)

In addition, after approval of this four-for-one stock split, theCompany changed the ratio between its ADRs (AmericanDepositary Receipts) and the TOTAL shares: since May 23, 2006one ADR corresponds to one share (compared to two ADRs pershare previously).

Arkema spin-offWithin the framework of the spin-off of Arkema’s chemical activi-ties from the Group’s other chemical activities, the General Meetingof Shareholders of May 12, 2006 approved TOTAL S.A.’s contribu-tion to Arkema, under the regulation governing spin-offs, of all itsinterests in the businesses included under Arkema’s perimeter, aswell as to allocate one Arkema share allotment right for eachTOTAL share, with ten allotment rights entitling the holder to oneArkema share. Fractional rights were traded on the Eurolist byEuronext™ market until June 26, 2006, and under Delisted Sharesfrom June 27 to December 29, 2006 inclusive.

Pursuant to the Article L 228-6 of the French Commercial Codeand the Articles 205-1 and 205-2 of the decree N° 67-236 ofMarch 23, 1967, the holders of allotment rights for fractionalArkema shares were informed by a notice prior to the sale of suchfractional shares (Avis préalable à la mise en vente de titres nonréclamés) published on August 3, 2006 in the French newspaperLes Echos, that:• as of the delisting of the allotment rights from the compartment

of delisted shares section of the regulated markets (comparti-ment des valeurs radiées des marchés réglementés) of EuronextParis dated December 29, 2006 after-hours trading, the allot-ment rights can still be negotiated over the counter until the saledate mentioned above in the notice;

• Arkema’s shares corresponding to allotment rights for fractionalshares will be sold on the Eurolist by Euronext™ two years afterthe publishing of the notice mentioned above, if they did not usetheir rights before the expiration date.

As of this sale, the former allotment rights for fractional Arkemashares will be, as necessary, cancelled and their holders will onlybe able to lay claim to the cash distribution of the net proceedsfrom unclaimed Arkema’s shares sale. TOTAL S.A. will make thenet proceeds of this sale available to their holders’ in a securedfinancial intermediary account for ten years.

When this time limit expires, the unclaimed amounts will be han-ded over to the French Caisse des dépôts et consignations wherethe holders will still be able to claim them for a period of twentyyears. After this time limit, the amounts will permanently becomeproperty of the French State.

Moreover, since May 18, 2006, Arkema’s shares have been freelytraded on the Eurolist by Euronext™.

Dividend for 2006 In accordance with the distribution policy announced at theGeneral Meeting of Shareholders on May 14, 2004, an interim dividend is paid in the fourth quarter of each year, except underextraordinary circumstances.The Board of Directors met on November 7, 2006 and, afterapproving the accounts as of September 30, 2006, approved aninterim 2006 dividend in the amount of 0.87 euros per share paidon November 17, 2006.For the fiscal year 2006, as in the past, TOTAL continued its dyna-mic dividend policy by proposing a dividend of 1.87 euros pershare to the General Meeting of Shareholders, including a balanceof 1.00 euro per share, which would be payable on May 18, 2007.This dividend of 1.87 euros represents an increase of 15% com-pared to the previous year. Over the past five years, this increaseamounts to an average of 16% per year. In 2006, TOTAL’s pay-outratio was 34% (a).

Share buybacks and share cancellationcontinued in 2006During 2006, TOTAL bought back 75.925 million shares of its own shares for cancellation, representing 3.1% of the capital (a).Over the 24 months preceding December 31, 2006, the Companycancelled 131,322,272 TOTAL shares, par value 2.50 euros pershare, representing 5.4% of the capital as of December 31, 2006.

Dividend over the past five years (a) (b)

2002 2003 2004 2005 2006

1.031.18

1.35

1.62

1.87*

(a) Amounts adjusted in order to take into account the four-for-one stock split effective asfrom May 18, 2006.(b) For 2004, 2005 and 2006 the lower part corresponds to the interim dividend.* Subject to approval by the Shareholders’ Meeting on May 11, 2007.

(a) TOTAL’s share prices, that are used to calculate the annual yields, take into considerationthe adjustment made by Euronext Paris after Arkema’s share allocation rights partition.

(a) Amounts adjusted in order to take into account the four-for-one stock split effective asfrom May 18, 2006.

Percentage of the capital bought back*

2002 2003 2004 2005 2006

3.0

4.6

3.5

2.83.1

* Average capital of year N = (Capital as of December 31, N-1+ Capital as of December31, N)/2. For 2002, excluding buybacks linked to coverage of employees options plans.For 2005 and 2006, excluding buybacks linked to the grants of restricted shares decidedby the Board of Directors on July 19, 2005 and July 18.

Appreciation of a portfolio invested in TOTAL shares For every 1,000 euros invested in TOTAL stock as of December31, in year N, by an individual resident in France, assuming that thenet dividends (excluding the tax credit) are reinvested in TOTALstock, and excluding tax and social withholding. Furthermore, theone-year yield between December 31, 2005 and December 31,2006 of an investment in a TOTAL share, with a sale on December31, 2006 of one tenth of Arkema’s share allocated for the spin-off(i.e. at a closing price of 38.93 euros of the Arkema Share), is 8.20%.

Investment Annual The capital date yield (a) invested

at the end of the period

would be

TOTAL CAC 40 TOTAL CAC 401 year January 1, 2006 7.7% 20.9% 1,077 1,2095 years January 1, 2002 9.8% 6.2% 1,596 1,35110 years January 1, 1997 16.5% 11.2% 4,605 2,89115 years January 1, 2002 15.6% 10.1% 8,798 4,235

76 o TOTAL IN 2006

The TOTAL share price

Average volume Highest Lowest Adjusted highest Adjusted lowesttraded price traded price traded price traded (b) price traded (b)

September 2005 11,125,183 57.28 53.38 56.54 52.69

October 2005 14,043,673 57.05 49.75 56.32 49.11

November 2005 10,856,295 56.05 51.45 55.33 50.79

December 2005 8,123,034 55.10 52.65 54.39 51.97

January 2006 11,177,540 58.15 53.30 57.40 52.62

February 2006 10,743,661 57.03 52.58 56.29 51.90

March 2006 10,487,025 55.35 51.43 54.64 50.76

April 2006 10,706,458 57.43 53.85 56.69 53.16

May 2006 15,249,339 57.10 48.65 56.37 48.65

June 2006 12,466,491 51.70 46.52 - -

July 2006 9,719,101 53.85 49.70 - -

August 2006 8,632,591 54.50 51.10 - -

September 2006 11,855,458 53.10 49.45 - -

October 2006 8,804,893 54.80 50.10 - -

November 2006 8,928,941 56.95 52.30 - -

December 2006 9,287,909 56.00 52.20 - -

January 2007 11,036,797 55.45 50.80 - -

February 2007 9,896,507 53.95 51.02 - -

Maximum on the period 58.15 57.40

Minimum on the period 46.52 46.52

(a) Source: Euronext Paris.(b) In order to take into account Arkema’s spin-off and the four-for-one stock split, Euronext Paris defined an adjustment of TOTAL’s historical stock price. Therefore, TOTAL’s stock price beforeMay 18, 2006 was multiplied by a 0.9871 adjustment coefficient (based on TOTAL’s 210 euros closing price on May 17, 2006 as well as Arkema’s reference stock price (before quotation) of27 euros)) and by 0.25.

TOTAL share over the last 18 months (on the Paris Stock Exchange) (a)

SHAREHOLDER NOTEBOOK u 77

Price of share (in euros) 2006 2005 2004 2003 2002

Highest (during regular trading session) 58.15 57.28 42.95 36.98 44.85

Adjusted highest (a) (during regular trading session) 57.40 56.54 42.40 36.50 44.27

Lowest (during regular trading session) 46.52 39.50 34.85 27.63 30.30

Adjusted lowest (a) (during regular trading session) - 38.99 34.40 27.27 29.91

Last of the year (close) 54.65 53.05 40.18 36.85 34.03

Adjusted last of the year (a) (close) - 52.37 39.66 36.38 33.59

Trading volume (average per session)

Paris Stock Exchange 10,677,157 10,838,962 10,975,854 11,803,806 11,917,604

London Exchange SEAQ International (b) 3,677,117 3,536,068 3,800,048 3,431,732 7 652,800

New York Stock Exchange (c) (number of ADRs) 1,500,331 1,716,466 1,199,271 978,117 956,940

Dividend per share (in euros)

Net dividend (d) 1.87 1.62 1.35 1.18 1.03

Tax credit (e) - - 0.30 0.59 0.51

(a) Adjusted market price of the spin-off of Arkema.(b) To make the trading volume on the SEAQ International comparable to the trading volume in Paris, the number of transactions recorded in London is usually divided by two to account foractivity of market makers in London. However, the volumes presented in the table above have not been divided by two.

(c) After the four-for-one stock split, which was approved by the General Meeting of shareholders of May 12, 2006, effective on May 18, 2006, as well as after the change in the ADR ratio, on May 23, 2006, one ADR now represents one TOTAL share. Moreover trading volumes in New York before May 23, 2006 were multiplied by two.

(d) For 2006, subject to approval by the General Meeting of Shareholders of May 11, 2007. This amount includes the interim 2006 dividend of 0.87 euros per share with a par value of 2.5euros paid on November 17, 2006.

(e) Based on a tax credit of 50% on the net dividends paid before January 1, 2005, enforceable date of tax credit elimination for individuals under the 2004 French Finance Law. For other shareholders, the tax credit was eliminated by this law as of January 1, 2004. Pursuant to Article 243 bis of the French General Tax Code, the interim dividend paid on November 17, 2006and the balance of the dividend paid on May 18, 2007 (subject to approval by the General Meeting of Shareholders of May 11, 2007) are eligible for the 40% rebate applying to individualsresiding for tax purposes in France provided for by Article 158 paragraph 3 of the French General Tax Code.

Information in this table from periods before May 18, 2006 has been recalculated to reflect the four-for-one stock split. Trading prices anddividends have been divided by four and trading volumes in Paris and London have been multiplied by four.

Estimated shareholder baseDistribution of shareholders by main category(excluding treasury shares)

Estimate at December 31, 2006 % of capital

Group employees (a) 4%

Individual shareholders 10%

Institutional shareholders 86%

France 23%

United Kingdom 15%

Rest of Europe 21%

North America 25%

Rest of world 2%

(a) Based on the definition of employee shareholding pursuant to Article L 125-102 of theFrench Commercial Code.

The number of French individual TOTAL shareholders is estimatedat approximately 570,000.

4%Employees

86%Institutional shareholders)

10%Individual shareholders

Distribution of shareholders by geographic region(excluding treasury shares)

Estimate at December 31, 2006excluding treasury shares % of capital

France 34%

United Kingdom 15%

Rest of Europe 23%

North America 26%

Rest of world 2%

2%Rest of world

15%United Kingdom

23%Rest of Europe

26%North America

34%France

I STRENGTHENING RELATIONSHIPS WITH INDIVIDUAL SHAREHOLDERS

2004 was marked by the implementation of a new communi-cations system intended for the 520,000 TOTAL individual share-holders. This new system allows TOTAL to achieve three goals:• communicate with each individual shareholders at least once

a year through the JDA (Shareholders Journal);• create more personalized communications with each shareholder

thanks to the daily use of Customer Relationship Management(CRM) database; and

• make it easier to read the Company’s financial statements for a population of non-specialists through training sessions offeredto member shareholders of the Shareholders Circle.

2005 allowed the consolidation of the existing system. A new format, in magazine form, was prepared for theShareholders Journal with the assistance of the ConsultativeShareholders Committee. The threshold for bearer shareholders toreceive a direct invitation to the shareholders’ meeting was redu-ced to 50 former shares (par value 10 euros per share).

2006 was marked by the following events:• A special communication program for the four-for-one stock split

and the spin-off of Arkema, including the sending of a completeinformation document, to all individual shareholders, a columndedicated on the website www.total.com (offering an access to a personalized simulation tool and audio explanations of theseoperations by Robert Castaigne, Chief Financial Officer ofTOTAL) and finally, the strengthening of the processing capacityfor phone, mail and internet information of internet requests fromshareholders.

• TOTAL won the prize for the Best Shareholders Service awardedby the Journal des Finances.

• www.total.com, was elected the third best website, during the6th edition of Grand Prix Boursoscan organized by Boursoramaand TLB on June 22, 2006.

• TOTAL was ranked third for the “Fils d’Or” 2006, prize for thebest individual shareholders service, awarded by La VieFinancière and Synerfil on November 16, 2006.

Finally, as in the past, TOTAL made efforts to promote meetingsand exchanges with individual shareholders. During 2006, thesemeetings involved nearly 13,000 individual shareholders.

Shareholders’ Meeting: a strong turnoutThe Shareholders’ meeting, held on May 12, 2006 gathered morethan 3,000 shareholders in attendance at the Paris ConventionCenter. As each year, this meeting was broadcast live and waslater available on the Group’s website (www.total.com). Notices ofthe meeting are sent to all the registered shareholders and to thebearer shareholders holding 200 shares or more (50 old shares).

“Actionaria” Trade Show: strong interest in the TOTAL standOn November 17 and 18, 2006, during the Actionaria Trade Showin Paris, the TOTAL team welcomed over 4,500 people at itsbooth, 5% more than in the previous year continuing the trend of increasing its presence year after year.

78 o TOTAL IN 2006

France: the Shareholders’Consultative Committee

t

SHAREHOLDER NOTEBOOK u 79

Meetings for individual shareholders inthe regionsTOTAL continued its schedule of information sessions for individualshareholders, with five meetings organized in Lyon, Brussels,Nantes, Marseille, and Biarritz. A total of more than 2,300 peopleattended the conferences. The cities of Lille, Metz, Tours,Grenoble, Rennes and, on the occasion of the Actionaria TradeShow, Paris are already scheduled for 2007.

Shareholders’ Consultative Committee:a strong contributionIn 2006, the Consultative Shareholders Committee (composed of twelve members all newly appointed on March 15, 2006 after a selection by a recruitment center), specifically provided clarifica-tion on communication tools used for the spin-off of Arkema andthe TOTAL four-for-one stock split.The Committee also worked on the contents of reference materialdistributed during the individual shareholders’ meetings as well as on the format of the financial notices periodically published by TOTAL.The committee was also consulted on the information in theShareholders Journal, the Shareholders’ Circle program and the Shareholder notebook of this publication.

Concerning the Annual General Meeting, the ConsultativeCommittee also addressed the format of the General Meetingnotice and gave its feedback on the holding of this meeting.

Finally, the opinion of the committee was recorded on informativecontents and put on line on TOTAL’s website.

France : “Actionaria” Trade Show

u

The Shareholders’ Circle: 30 eventsThe Shareholders’ Circle, opened to shareholders with at least 30 bearer shares or one registered share, organized 30 events in 2006 (compared to 28 in 2005). These events, proposed to the members of the Shareholders’ Circle, provided the opportunityto invite almost 3,000 individual shareholders, compared to 2,830in 2005. Members of the Shareholders’ Circle visited industrial facilities as well as sites supported by the TOTAL Foundation. Theyalso participated in trainings intended to the understanding of TOTAL’s accounts and in cultural events within the framework of the Group’s sponsorship policy.

Registered shares: facilitating sharetransactions What are registered shares?TOTAL shares, which are generally bearer instruments, may beregistered. In this case, shareholders are identified by TOTAL S.A.,in its capacity as the issuer, or by its agent, BNP Paribas SecuritiesServices.

There are two forms of registration:• Administered Registered Shares: Shares are registered with

the issuing Company through BNP Paribas Securities Services,but the holder’s financial intermediary continues to administerthem with regards to sales, purchases, coupons, shareholders’meeting notices, etc.

• Pure registered shares: The issuing Company retains and directlyadministers the shares on behalf of the holder through BNPParibas Securities Services which administers the sales, purcha-ses, coupons, shareholder meeting notices, etc. so that the shareholder does not need to appoint a financial intermediary.This form of registration is not very compatible with the registra-tion of shares in a PEA given the applicable administrative procedures.

Some of the advantages of pure registered shares are: • no custodial fees;• a dedicated toll-free number for all contacts with BNP Paribas

Securities Services (a toll-free call within France): 0 800 11 7000or +33 1 40 14 80 61 (from abroad) ; from Monday to Friday,8:45 am - 6:00 pm (fax +33 1 55 77 34 17);

• easier placement of market orders (a) (telephone, mail, fax, internet);• preferential brokerage fees: 0.20% (before tax) based on the

amount of the transaction, with no minimum amount and capped to 1,000 euros per transaction;

• personal notice of Meeting of Shareholders;• double voting rights if shares are held continuously for two

consecutive years;• complete information about TOTAL: the shareholder receives at

home all information published by the Group for its shareholders;• internet access to the shareholders’ account;• the ability to join the TOTAL Shareholders’ Circle with one share.

To convert TOTAL shares to pure registered shares, just fill outthe form that can be obtained on request from the IndividualShareholder Relation Department and send it to the financialintermediary.

Once BNP Paribas Securities Services receives the shares, it willsend a certificate of account registration and ask for the following:• a bank account number (or a postal account or savingsaccount number) for payment of dividends;• a market service agreement to facilitate trading the TOTALshares on the stock exchange.

Communication award from the Journaldes FinancesIn 2006 TOTAL was awarded the top prize for service to sharehol-ders, awarded by the Journal des Finances.

TOTAL was top of the rankings drawn up by the Journal desFinances on the basis of the quality of listed companies’ financialcommunication (taking into account both form and content) aimedat individual shareholders.

This award underlines the increased interest TOTAL has taken inthe quality of its communication with shareholders.

ContactsIndividual Shareholders

For general information, conversion of bearer to regis-tered shares, membership in the Shareholders Circle:

TOTAL S.A. Individual Shareholders Relations Departments2, place de la Coupole - La Défense 692400 Courbevoie - FRANCE

Tel. From France 0 800 039 039 (toll-free number)

From outside France Tel: + 33 1 47 44 24 02

From Monday to Friday, 9:00 am-12:30 pm and 1:30 pm-5:30 pm

Fax From France: 01 47 44 20 14

From outside France: + 33 1 47 44 20 14

E-mail actionnairesindividuels@total.comcercledesactionnaires@total.com

Contacts Valérie Laugier (Individual Shareholders Relations Manager)

Jean-Louis Piquée (Individual Shareholders Relations)

The JDF® TOTAL Prize

o

France: TOTAL organizes asession for financial analysts

u

80 o TOTAL IN 2006

(a) Subject to approval by the May 11, 2007 shareholders’ meeting.

I RELATIONSHIPS WITH INSTITUTIONAL SHAREHOLDERS AND FINANCIAL ANALYSTS

Every year, members of the Group’s management meet with portfolio managers and financial analysts in the leading financialcenters of Europe (Paris, Brussels, Amsterdam, the Hague,Rotterdam, London, Dublin, Edinburgh, Frankfurt, Munich,Cologne, Düsseldorf, Vienna, Zurich, Geneva, Lausanne,Stockholm, Helsinki, Copenhagen, Milan, Madrid and Lisbon) andNorth America (New York, Boston, Philadelphia, Chicago, Denver,Detroit, Minneapolis, Dallas, Atlanta, Houston, Miami, SanFrancisco, Los Angeles, San Diego, Montreal and Toronto). Thefirst meetings are held in the beginning of the year, after publica-tion of the results for the prior fiscal year. The second meetingstake place in the second half of the year, after publication of theresults of the first half of the current year. Several information mee-tings are also organized when earnings are published. The mate-rial from these meetings is available in the “Investors Relations /Publications” section of www.total.com.

Three telephone conferences led by Robert Castaigne, ChiefFinancial Officer for the Group, were also conducted in 2006, as every year, to discuss earnings for the first, second and thirdquarters of the year. These conferences are also available in the“Investors Relations/Publications” section of www.total.com.

The Group organized about 400 meetings with institutional inves-tors and analysts in 2006.

In addition, on November 14 and 15, 2006, TOTAL organized aseminar to introduce the activities and strategy of the Upstreamdivision. Nearly 80 persons, half of them composed of TOTAL’smajor institutional shareholders and the other half of analysts,attended this seminar animated by Christophe de Margerie andthe principal executives in charge of the Upstream division.

Contacts• Paris:

Jérôme SchmittVice President Investor RelationsTOTAL S.A.2, place de la Coupole - La Défense 692078 La Défense CedexFRANCEPhone 01 47 44 58 53 or +33 1 47 44 58 53Fax 01 47 44 58 24 or +33 1 47 44 58 24E-mail investor-relations@total.com

• North America:

Robert HammondDirector of Investor Relations North AmericaTOTAL AMERICAN SERVICES INC.100 Pavonia Avenue, Suite 401Jersey City, NJ 07310USAPhone +1 201 626 3500Fax +1 201 626 4004E-mail ir.nyc@TOTAL.com

2007 CalendarFebruary 14 Results for the 4th quarter and full year2006April 4 Meeting with individual shareholders in LilleMay 4 Results for the 1st quarter 2007May 11 Shareholders’ Meeting at the Paris ConventionCentreMay 18 Payment in cash of the final dividend for 2006 (a)

June 6 Meeting with individual shareholders in MetzAugust 2 Results for the 2nd quarter and the 1st half ofthe year 2007September 5 Presentation of mid-2007 outlookOctober 16 Meeting with individual shareholders in ToursNovember 7 Results for the 3rd quarter 2006November 17-18 Actionaria Trade Show in Paris /Information meeting in the amphitheatre of ParisConvention CenterNovember 27 Meeting with individual shareholders in GrenobleDecember 6 Meeting with individual shareholders in Nice

2008 CalendarMay 16 Shareholders’ meeting in Paris

SHAREHOLDER NOTEBOOK u 81

(a) Subject to approval by the May 11, 2007 shareholders’ meeting.

82 o TOTAL IN 2006

FINANCIALINFORMATION

FINANCIAL INFORMATION u 83

STATUTORY AUDITOR’SREPORT ON THE CONSOLIDATED FINANCIAL STATEMENTS

uu For the year ended December 31, 2006

To the shareholders,

In compliance with the assignment entrusted to us by the Annual General Shareholder’s Meeting, we have audited the accompanying conso-lidated financial statements of TOTAL S.A. for the year ended December 31, 2006.

The consolidated financial statements have been approved by the Board of Directors. Our role is to express an opinion on these financial statements based on our audit.

I Opinion on the consolidated financial statements We conducted our audit in accordance with professional standards applicable in France. Those standards require that we plan and performthe audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement. An auditincludes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includesassessing the accounting principles used and significant estimates made by the management, as well as evaluating the overall financial statements presentation. We believe that our audit provides a reasonable basis for our opinion.

In our opinion, the consolidated financial statements give a true and fair view of the assets, liabilities, financial position and results of the Groupas at December 31, 2006 in accordance with IFRSs as adopted by the European Union.

II Justification of our assessments In accordance with the requirements of article L 823-9 of the Commercial Code relating to the justification of our assessments, we bring to your attention the following matters:

Some accounting principles applied by TOTAL involve a significant amount of judgments and estimates principally related to the applicationof the successful efforts method for the oil and gas activities, the depreciation of long-lived assets, the provisions for dismantlement, removaland environmental costs, the evacuation of retirement obligations and the determination of the current and deferred taxation. Detailed information relating to the application of these accounting principles is given in the notes to the consolidated financial statements.

Our procedures relating to the material judgments or estimates made by the management and which can result from the application of theseaccounting principles enabled us to assess their reasonableness.

The assessments were made in the context of our audit of the consolidated financial statements taken as a whole, and therefore contributedto the formation of the unqualified opinion expressed in the first part of this report.

III Specific verification In accordance with professional standards applicable in France, we have also verified the information given in the Group management report.We have no matters to report as to its fair presentation and conformity with the consolidated financial statements.Paris La Défense, April 3, 2007

The statutory auditors

KPMG Audit ERNST & YOUNG AuditDepartment of KPMG S.A.

René Amirkhanian Gabriel Galet Philippe Diu

84 o TOTAL IN 2006

For the year ended December 31, (in M€) (a) 2006 2005

Sales 153,802 137,607

Excise taxes (21,113) (20,550)

Revenues from sales 132,689 117,057

Purchases net of inventory variation (83,334) (70,291)

Other operating expenses (19,536) (17,159)

Exploration costs (634) (431)

Depreciation, depletion, and amortization of tangible assets and leasehold rights (5,055) (5,007)

Operating income

Corporate (545) (467)

Business segments* 24,675 24,636

Total operating income 24,130 24,169

Other income 789 174

Other expense (703) (455)

Financial interest on debt (1,731) (1,214)

Financial income from marketable securities & cash equivalents 1 367 927

Cost of net debt (364) (287)

Other financial income 592 396

Other financial expense (277) (260)

Income taxes (13,720) (11,806)

Equity in income (loss) of affiliates 1,693 1,173

Consolidated net income from continuing operations (Group without Arkema) 12,140 13,104

Consolidated net income from discontinued operations (Arkema) (5) (461)

Consolidated net income 12,135 12,643

Group share** 11,768 12,273

Minority interests and dividends on subsidiaries’ redeemable preferred shares 367 370

Earnings per share (euros) (b) 5.13 5.23

Diluted earnings per share (euros)*** (b) 5.09 5.20

* Adjusted operating income from business segments 25 166 23,468

Adjusted net operating income from business segments 12 377 11,912

** Adjusted net income 12,585 12,003

*** Adjusted diluted earnings per share (euros) (b) 5.44 5.08

(a) Except for per share amounts.(b) 2004 and 2005 amounts are recalculated to reflect the four-for-one stock split that took place on May 18, 2006. Earnings per share from continuing and discontinued operations are disclosed in Note 32 to the consolidated financial statements.

CONSOLIDATED STATEMENT OF INCOME

CONSOLIDATED STATEMENT u 85

For further information, please consult TOTAL’s “Registration Document 2006”, which is available in print or by accessing in the Group’s web site www.total.com

CONSOLIDATEDBALANCE SHEET

86 o TOTAL IN 2006

As of December 31 (in M€) 2006 2005ASSETS

Non-current assets

Intangible assets, net 4,705 4,384

Property, plant and equipment, net 40,576 40,568

Equity affiliates: investments and loans 13,331 12,652

Other investments 1,250 1,516

Hedging instruments of non-current financial debt 486 477

Other non-current financial assets 2,088 2,794

Total non-current assets 62,436 62,391

Current assets

Inventories, net 11,746 12,690

Accounts receivable, net 17,393 19,612

Prepaid expenses and other current assets 7,247 6,799

Current financial assets 3,908 334

Cash and cash equivalents 2,493 4,318

Total current assets 42,787 43,753

Total actif 105,223 106,144

LIABILITIES & SHAREHOLDERS' EQUITY

Shareholders’ equity

Common shares 6,064 6,151

Paid-in surplus and retained earnings 41,460 37,504

Cumulative translation adjustment (1,383) 1,421

Treasury shares (5,820) (4,431)

Total shareholders’ equity - Group share 40,321 40,645

Minority interests and subsidiaries’ redeemable preferred shares 827 838

Total shareholders’ equity 41 148 41,483

Non-current liabilities

Deferred income taxes 7,139 6,976

Employee benefits 2,773 3,413

Other non-current liabilities 6,467 7,051

Total non-current liabilities 16,379 17,440

Non-current financial debt 14,174 13,793

Current liabilities

Accounts payable 15,080 16,406

Other creditors and accrued liabilities 12,509 13,069

Current borrowings 5,858 3,920

Other current financial liabilities 75 33

Total current liabilities 33,522 33,428

Total liabilities and shareholders’ equity 105,223 106,144

CONSOLIDATED FINANCIAL INFORMATIONFOR THE LAST FIVE YEARS

CONSOLIDATED BALANCE SHEET u 87

Summary consolidated balance sheet for the last five yearsAs of December 31 (in M€) 2006 2005 2004 2003 (b) 2002 (b)

ASSETS IFRS IFRS IFRS

Non-current assets 62,436 62,391 53,827 50,450 54,010

Intangible assets 4,705 4,384 3,176 2,017 2,752

Property, plant and equipment 40,576 40,568 34,906 36,286 38,592

Other non-current assets 17,155 17,439 15,745 12,147 12,666

Current assets 42,787 43,753 32,940 29,513 31,319

Inventories 11,746 12,690 9,264 6,137 6,515

Other current assets 31,041 31,063 23,676 23,376 24,804

Total assets 105,223 106,144 86,767 79,963 85,329

LIABILITIES

Shareholders’ equity, Group share 40,321 40,645 31,608 30,406 32,146

Minority interests and preferred shares 827 838 810 1,060 1,201

Provisions and other non-current liabilities 16,379 17,440 16,283 15,605 16,643

Non-current financial debt 14,174 13,793 11,289 9,783 10,157

Current debt 33,522 33,428 26,777 23,109 25,182

Total liabilities 105,223 106,144 86,767 79,963 85,329

Summary consolidated income statement for the last five yearsYEAR 2006 2005 (a) 2004 (a) 2003 (b) 2002 (b)

(in M€) IFRS IFRS IFRS

Sales 153,802 137,607 116,842 104,652 102,540

Operating expenses (124,617) (108,431) (94,721) (86,905) (86,622)

Depreciation and amortization of tangible assets (5,055) (5,007) (5,095) (4,977) (5,792)

Operating income 24,130 24,169 17,026 12,770 10,126

Other income and expense 86 (281) 2,302 (1,199) 31

Other financial income and expense (49) (151) (36) (85) (35)

Income taxes (13,720) (11,806) (8,603) (5,353) (5,034)

Share net income of equity methodconsolidated affiliates 1,693 1,173 1,158 1,086 866

Net income from continuing operations(Group excluding Arkema) 12,140 13,104 11,847 - -

Net income from Arkema (5) (461) (698) - 13

Consolidated net income 12,135 12,643 11,149 7,219 5,954

Minority interests 367 370 281 194 13

Net income 11,768 12,273 10,868 7,025 5,941

(a) Data for 2005 and 2004 restated under IFRS, to take account of the spin-off of the Arkema activities decided at the time of the Shareholders’ Meeting on May 12, 2006.(b) French GAAP.

88 o TOTAL IN 2006

I Photos credits:

Total / P. Adenis • D. Albretcht • Kjetil Alsvik • B. Bernard • J. Borowski • P. Boulen • B. Chazarenc • M. Dufour • P. Foucha • T. Gonzalez• Jayan KP • M. Labelle • P. Laurent • E. Miller • G. Perrin • V. Rackelboom • M. Roussel • Ph. Schaff • L. Zylberman • Biodiversity ResearchProgram • Ortholittoral 2000/Ifremer • Santo 2006 • D.R.

© TOTAL S.A. • May 2007 • Design and production: Harrison & Wolf