Via The New York Times, an interesting report on Total’s activities in Yemen.  As the article notes

“…Yemen is a showcase for Total, whose experience here shows how far an oil company will go these days to unearth new energy supplies.

Because of the endlessly complicated interplay of geology and geopolitics, access to petroleum resources is increasingly constrained, costs have soared and energy projects are becoming more complex. Add the recent, dizzying collapse in oil prices to that picture, and you have a raft of companies rethinking their investments and scurrying to cut costs.

So Mr. Deffontaines was philosophical, and a little amused, when he recounted some of the challenges the company had faced here, like negotiating with tribal leaders and sending actors to remote villages to stage a play about the hazards of gas pipelines. In meetings with government officials to thrash out problems, participants typically chew khat, a mildly narcotic plant that is widely consumed in Yemen but banned in many places around the world.

This is a country where tribes are often better armed than government troops, where piracy runs rampant along the coastline, and where many trappings of modern life are absent.

The risks are so pervasive that Total employees can’t travel around town without an escort and are not allowed to leave Sana, the Yemeni capital, on their own. A wave of attacks linked to Al Qaeda occurred last year, including suicide bombings at the United States Embassy in September that left almost 20 dead, 6 of them attackers.

But Total has still gained a strong foothold here. It will soon start shipping liquefied natural gas from the Gulf of Aden, completing a $4 billion project begun less than four years ago. Those shipments will make Yemen the newest member of the world’s small club of gas exporters — and earn the government as much as $50 billion in tax revenue over the next 25 years.

“If we can build this here, we can do it anywhere,” says Stéphane Venes, a construction manager at Total’s natural gas plant in Balhaf, a coastal town. Building the plant required about 10,000 workers, a monumental endeavor in such an isolated place. It also meant building a 210-mile pipeline that had to snake through 22 different tribal lands and one of the world’s most unforgiving deserts.

Such “audace” is precisely what Christophe de Margerie, Total’s chief executive, says he would like to instill throughout his company.

“I make a big distinction between being risky and being bold,” says Mr. de Margerie, 57, in an interview at Total’s headquarters in La Défense, the business district on the outskirts of Paris.

“If you’re in a desert without water, that’s not bold, that’s dumb,” he says. “If you storm out of the trenches with your sword drawn while machine guns fire at you, it’s not bold, it’s dumb. Times have changed.”

Total doesn’t have much choice but to charge ahead. Although it managed for years to expand its hydrocarbon production — even as larger rivals like Exxon Mobil and Royal Dutch Shell struggled to keep output from falling — that run ended last year when it reported a production drop.

Like its competitors, Total now faces one of the sharpest downturns in the history of the oil business, with consumption collapsing and oil prices shedding 73 percent of their value since peaking in July. At the same time, public opinion is sharply divided about oil companies themselves as environmental concerns take an increasingly important place in debates about the future of the energy business.

With no domestic production but deep roots in the Middle East and Africa, Total — as well as its longtime domestic rival Elf Aquitaine, which it acquired in 2000 — has always been forced to blaze or bully its way through faraway lands.

It has struck deals in countries where few wished to do business, like Sudan and Myanmar, or sailed against the tide when it saw lucrative opportunities, as it did in Iran in the 1990s. Such forays have come with complications: in separate investigations, French judges have been examining Total’s role in the United Nations oil-for-food program in Iraq, and whether it made secret payments to enter the Iranian market.

Total’s appetite for risk has also turned it into the top-ranked Western oil company in Africa, and the second-largest in the Middle East, after Exxon. Total pumps an average of 2.3 million barrels of oil and gas a day, and it earned more than $15 billion last year.

While the company has operations throughout the Middle East, some of its biggest bets in the region have not yet paid off.

During the 1990s, Total negotiated with the government of Saddam Hussein and laid the groundwork to eventually develop Iraqi oil fields. But now, some Iraqi officials prefer American companies to European ones and view Total with suspicion because of this past. In Iran, a political confrontation with the West has forced a reluctant Total to walk away — at least for now — from a multibillion-dollar investment to develop a huge natural gas field there.

Total still has its eyes on other targets. It’s aggressively developing assets around the world, whether in Angola’s deep offshore sites, the Sahara in Libya or the forests of Venezuela. And it has decided that part of its future lies in developing expertise in nuclear energy.

“They are very good at capturing deals,” says J. Robinson West, the chairman of PFC Energy, a consulting firm based in Washington that counts Total as a client. “They are also prepared to ride through storms where American companies aren’t. And they are more commercial and agile than others.”

…Total recently outplayed its rivals when it grabbed a piece of a huge offshore natural gas field in Russia, beating out ChevronConocoPhillips to snare 25 percent of the project. The field, Shtokman, in the Barents Sea, about 350 miles northeast of Murmansk, will cost $20 billion to $25 billion to develop. It is likely to be one of the biggest energy projects of the next decade. and

While that deal was a success, the company suffered a setback more recently in Saudi Arabia’s treacherous Rub al-Khali desert, where the kingdom in 2001 had taken the rare step of allowing foreign investors to look for natural gas.

The new policy initially generated great enthusiasm among Total and other foreign oil companies, which saw it as the kingdom’s first step toward reopening its oil sector after nationalizing Aramco in the early 1980s.

But the excitement quickly waned after the Saudis imposed strict limits on foreign partners, including mandates that all oil discoveries belonged solely to the kingdom and that all gas found there had to be sold on the Saudi market at a cut rate. Total left Rub al-Khali early last year, after its program there ran far over its budget and its teams drilled three wells that came up dry. Shell, another shareholder in the venture, has decided to stick with the project.

No hard feelings, however. After Total left Rub al-Khali, Aramco renewed its commitment to build a new refinery with the French company in the Red Sea port town of Jubayl, said Michel Bénézit, Total’s president for refining and marketing.

The refinery is expected to be completed by around 2013.

…At a time when national oil companies — like Aramco, Petronas in Malaysia, Petrobras in Brazil and Gazprom in Russia — control large shares of the world’s reserves, and nationalistic governments tighten the screws on foreign companies, the traditional role of Western oil companies is under threat.

“Being accepted simply means being able to perform your job even in the most hostile environments,” Mr. de Margerie says.

THE Hadhramaut region of central Yemen offers a stunning natural backdrop of deep gorges and lush valleys interlacing one another like delicate fingers.

It also provides a good window on how Total balances the requirements of its oil business and its relationship with the locals.

Total operates its main oil-producing block on a desert plateau about 700 feet above the valley. The company’s rigs are practically invisible from below. On the plateau, the scene feels like a lunar landscape. The facility, called Block 10, produces around 50,000 barrels a day, a relatively small operation compared with the huge fields found in neighboring Saudi Arabia.

Despite its size, the operation exemplifies the hardships that Total is willing to take on in its hunt for new energy sources.

The company, which has been in Yemen since the 1980s, is now the country’s largest outside investor. While the government has welcomed foreign concerns, dealings can be complicated.

In 2006, a joint venture between the Hunt Oil Company and Exxon ended abruptly after Yemen canceled a contract to explore a field known as Marib al-Jawf.

Total’s managers here believe that their work with local communities — building schools or financing computer classes and sewing tutorials — can help them avoid similar problems.

But dealing with local residents can still be tricky. A few months ago, torrential rains devastated the region that lies beneath Total’s operations, uprooting nearly half the palm trees in the area and killing 44 people. The company says it has provided more than $300,000 in emergency aid to help deal with the flooding, in addition to $800,000 it spends each year for its own local development programs….”