French oil major Total SA pledged to raise its capital expenditure to €18.1 billion in 2012, joining an industry trend for big oil companies to have to spend more on exploration and development to replenish dwindling supplies.
The increase came as Total reported higher fourth-quarter profit on the back of rising oil and gas prices.
Shell and BP have also lately announced significant capex rises and some investors fear the additional spending will not significantly boost returns as margins on many new projects are tight.
Total chief executive Christophe de Margerie added he was looking at investing in the semi-autonomous Kurdish area of Iraq but found southern Iraq unattractive.
Total said net income excluding one-off items related to changes in the value of fuel inventories rose 7 per cent to €2.73 billion. Analysts at Bernstein and Cheuvreux said the result was in line with their expectations.
In dollar terms, Total's underlying profit was 6 per cent higher than the same period in 2010, compared with a 14 per cent rise at BP and an 18 per cent increase at Royal Dutch Shell.
Brent crude averaged $109 per barrel in the quarter, up 26 per cent on the same period in 2010 due to strong global demand and unrest in the Middle East, while the price Total received for its natural gas rose 21 per cent.
However, Total said its return on average capital employed fell, in part because of higher costs which increased 14 per cent, on a per barrel basis, in the upstream division.
Oil prices were at an all time record for a full year in 2011, yet the big oil companies failed to match the headline profit figures they were reporting several years ago when oil prices were much lower.
Total said its production was unchanged in the fourth quarter at 2.38 million barrels of oil equivalent per day (boepd) and fell 1 per cent over the year to 2.35 million boepd.
A weak refining market also weighed on results and forced Total, Europe's largest refiner by capacity, to write down the value of its crude processing assets.
Total confirmed it expected to increase production by between 2 and 3 per cent in 2012, depending on production recovery in Libya and Syria.
Reuters
