Registration Document 2005 - Total.com

2
Business overview
Chemicals - Base Chemicals
Base petrochemicals
Base petrochemicals encompasses the olefins and aromatics
produced by steamcracking petroleum cuts, mainly naphtha, as
well as propylene and aromatics produced in the refineries of the
Group. The economic environment for these activities is extremely
volatile and margins are strongly influenced by the evolution of the
price of naphtha.
The year 2005 was characterized by a significant increase in
the price of naphtha. The subsequent increase of the prices of
steamcracker products had a negative impact on the global level of
the demand for derivatives.
Olefins production increased by approximately 4% in 2005
compared to 2004 reaching a new record level after having
increased by 12% in 2004 compared to 2003.
Polyethylene
Polyethylene is a plastic produced by the polymerization of ethylene
manufactured in the Group’s steamcrackers. It is principally
intended for the packaging, automotive, food, cable and pipe
markets. Margins are strongly influenced by the level of demand
and by competition from expanding production in the Middle East,
which takes advantage of favorable access to raw materials
(ethane, which is associated with crude oil production).
In 2005, demand in Asia remained strong and absorbed
most of the increased production from the Middle East.
In the United States, hurricanes had a significant impact on
production. In this environment, TOTAL’s sales volumes decreased
by 3% compared to 2004 after having increased by 5% in 2004
compared to 2003.
Polypropylene
Polypropylene is a plastic produced by the polymerization of
propylene manufactured in the steamcrackers and refineries of
the Group and 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 by the
availability and price of propylene.
In 2005, prices reached record levels which adversely impacted
demand, particularly in Europe. Hurricanes also had a negative
impact on US demand. In Asia, demand remained weak in the first
half of the year but improved in the second half. Sales volumes
globally increased by 7% in 2005 compared to 2004, and by 3% in
2004 compared to 2003.
50 TOTAL - Registration Document 2005
Styrenics
This business unit encompasses styrene monomer, polystyrene and
elastomers. Most of the styrene produced by the Group is used in
the production of polystyrene. Polystyrene is a plastic principally used
in packaging, domestic appliances, electronics and audio-video.
Margins are strongly influenced by the level of polystyrene demand as
well as by the price of benzene, the principal raw material.
In 2005, polystyrene demand was particularly weak in Europe and
in North America after moderate growth in 2004. Demand was
strong in China in 2005 and 2004, where TOTAL’s 2005 sales
increased by 22% compared to 2004.
Fertilizers
The Fertilizers business unit (Grande-Paroisse) manufactures and
markets nitrogen fertilizers, made using natural gas, and complex
fertilizers, made using nitrogen, phosphorus and potassium
products. Margins are strongly influenced by the price of natural
gas.
In 2005, sales grew by approximately 7% compared to 2004 after
having increased by more than 12% in 2004 compared to 2003.
Volumes of nitrogen fertilizers sold in 2005 increased markedly while
the demand for complex fertilizers fell sharply.
Grande-Paroisse has continued to deal with the consequences of
the explosion that struck its Toulouse plant on September 21, 2001
and has continued to make payments, under the French law
presumption of civil responsibility, over and above the compensation
paid by insurance companies, reaching a cumulative amount
approaching 1,165 M€ as of December 31, 2005.