(Updates with union comment in eighth paragraph.)
Oct. 10 (Bloomberg) -- Total SA’s overhaul of its refining, petrochemicals and marketing businesses isn’t in preparation for a sale, Chief Executive Officer Christophe de Margerie said.
“No, there is no planned IPO or sale,” he said at a briefing to discuss the merger of the refining and petrochemicals divisions and creation of a separate fuel- marketing operation. “One can never say never, but our biggest preoccupation is to make this tool better performing.”
Total, Europe’s biggest refiner, said there won’t be job cuts following the reorganization.
“There is urgency because the market is bad. The European market is not growing,” Margerie said today, adding that refining margins were negative in August and early September and have now climbed to about $22 a ton.
De Margerie raised a profit target for the refining and marketing business between 2010 and 2014.
The aim of the plan is to “unlock value” for the activities, even in European and U.S. markets where demand for fuel products is decreasing, he said. “I think we can make refining and chemicals profitable in Europe.”
Europe’s third-largest oil company has reduced refining through the closure of its plant near Dunkirk in France, capacity reduction at Normandy and the sale of its 49 percent stake in Spain’s Cia. Espanola de Petroleos SA. Total is also trying to sell its Lindsey plant in the U.K.
“Refining and petrochemicals are doing badly so we are worried about future investment," Charles Foulard, a spokeman for the CGT union, said by telephone. ‘‘This reorganization may not be complete. There could be restructuring and closures to come."
The union, the largest among French refinery workers, isn’t planning any strikes in response to the announcement, he said.
Total will have the broad outline of the overhaul ready by January and it may be complete a year after that, Margerie said. The move could be accompanied by salary increases in the petrochemicals division to bring them in line with refining, although costs of the reorganization will be minimal, he said.
--Editors: Will Kennedy, Stephen Cunningham
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