The long-term contracts under which Total sells its natural gas production usually provide for a price related to, among other factors, average crude oil and other petroleum product prices, as well as, in some cases, a cost-of-living index. In most cases, priceformulas entail a time lag or an adjustment over time that reflectschanges in oil price indexes.

In the context of deregulated natural gas markets, which allowcustomers to more freely access suppliers, in turn leading to newmarketing schemes that are more flexible than traditional long-termcontracts, Total is developing trading, marketing and logisticsbusinesses to offer its natural gas production directly to customers,primarily in the industrial and commercial markets.

Europe

Total has been active in the downstream sector of the gas value chain in Europe for more than sixty years to maximize the value of its gas reserves.

In France, the Group’s transport and storage businesses located in the southwest of the country are grouped under TIGF, a whollyowned subsidiary of the Group. This subsidiary operates a regulated transport network of 5,000 km of gas pipelines and, under a negotiated scheme, two storage units with 87 Bcf (2.5 Bm3) of usable capacity, representing approximately 20% of the natural gas storage capacity in France ¹.

Highlights of 2009 included:

• The inauguration in October of the Artère de Guyenne gas pipeline. This pipeline (70 km long and 900 mm in diameter) connects Captieux and Mouliets-et-Villemartin to facilitate the transport of gas, notably from the Fos Cavaou LNG terminal, to northern France.


• The launch of an open season, involving four French and Spanish transportation operators, including TIGF, to develop Franco-Spanish interconnections. This open season allowed the longterm allocation of 80% of gas transport capacities between France and Spain in both directions. These allocations are scheduled to be in effect by 2013 with the development of two new projects: the Artère du Béarn and phase B of the Artère de Guyenne gas pipelines.


• The increase by 3.5 Bcf (100 Mm3) of the storage capacity at Lussagnet in April, in compliance with the authorization provided by the decree published on April 9, 2008.


• The acquisition of a 26.2% interest (through its interest in Géosud) in Géométhane, an Economic Interest Grouping that owns natural gas storage in a salt cavern with a capacity of 10.5 Bcf (0.3 Bm3), located in Manosque, in the southeast of France. A project to increase the storage capacity by 7 Bcf (0.2 Bm3) is under study for a commissioning scheduled in 2016.

In addition, the European Union adopted, on July 13, 2009, the Third Energy Package, which includes two directives and three regulations related to the natural gas and electricity markets.TOTAL will assess the potential impact on its gas and electricity transport, storage and supply operations as soon as the legislation is transposed into French law.

Regarding its marketing business, TOTAL is mainly developing on three major European markets.

France

In France, TOTAL operates through its marketing subsidiary Total Énergie Gaz (TEGAZ) which sold 208 Bcf of natural gas (5.9 Bm3) in 2009, compared to 229 Bcf (6.5 Bm3) in 2008 and 245 Bcf (7 Bm3) in 2007. Despite a sharp decline in demand due to the economic crisis, TEGAZ posted a strong increase in sales to industrial and commercial customers, which are the subsidiary’s main market segments.

Spain

In Spain, Cepsa Gas Comercializadora markets gas in the industrial and commercial sectors. This company is held by TOTAL (35%), CEPSA (35%) and the Algerian national oil company, Sonatrach (30%). In 2009, Cepsa Gas Comercializadora sold approximately 70 Bcf (2 Bm3) of natural gas to industrial and commercial customers, similar to 2008, compared to 59 Bcf (1.7 Bm3) in 2007.

United Kingdom

In the United Kingdom, TOTAL’s subsidiary Total Gas & Power Ltd markets gas and power to the industrial and commercial markets. The subsidiary is also active in gas, electricity and LNG trading worldwide. In 2009, 130 Bcf (3.7 Bm3) of natural gas was sold to industrial and commercial customers, compared to 134 Bcf (3.8 Bm3) in 2008 and 124 Bcf (3.5 Bm3) in 2007. Electricity sales amounted to 4.1 TWh in 2009, compared to 4.6 TWh in 2008 and 3.6 TWh in 2007. In 2007, TOTAL disposed of its 10% interest in Interconnector UK Ltd, a gas pipeline connecting Bacton in theUnited Kingdom to Zeebrugge in Belgium. This disposal did not affect TOTAL’s rights to transport gas through the pipeline.

The Americas

United States

In the United States, the Group’s subsidiary Total Gas & Power North America Inc. marketed 1,586 Bcf (45 Bm3) of natural gas in 2009, compared to approximately 1,652 Bcf (46.9 Bm3) in 2008 and 1,606 Bcf (45.5 Bm3) in 2007, supplied by its own production and external sources.

Mexico

In Mexico, Gas del Litoral, a company in which TOTAL holds a 25% interest, sold approximately 173 Bcf (4.9 Bm3) of natural gas in 2009, its third full year of activity, similar to 2008, compared to 95 Bcf (2.7 Bm3) in 2007.

South America

In South America, TOTAL owns interests in several natural gas transport companies in Argentina, Chile and Brazil, including the following:

• a 15.4% interest in Transportadora de Gas del Norte (TGN), which operates a gas transport network covering the northern half of Argentina ;


• a 56.5% interest in the companies that own the GasAndes pipeline, which connects the TGN network to the Santiago del Chile region ;


• a 9.7% interest in Transportadora Gasoducto Bolivia – Brasil (TBG), whose gas pipeline supplies southern Brazil from the Bolivian border.

These assets represent a total integrated network of approximately 9,500 km of pipelines serving the Argentine, Chilean and Brazilian markets from gas-producing basins in Bolivia and Argentina, where the Group has natural gas reserves.

The actions taken by the Argentine government after the 2001 economic crisis and the subsequent energy crisis, marked in 2007 by a severe gas shortage during the southern winter, put Total’s Argentine subsidiaries in difficult financial and operational situations, even after taking into account the restructuring of TGN’s debt, which was completed in 2006. The sale of the Group’s Argentine power generation assets was completed in 2007 and procedures to protect Total’s investments, initiated in 2002 with the International Center for Settlement of Investment Disputes (ISCID), are ongoing.

During 2008 and 2009, gas production in Argentina decreased substantially, reducing the export of gas to Chile and prompting commercial discussions between GasAndes and its shippers about transportation contracts and their commitments.

Due to the deterioration of TGN’s financial situation as a result of the freeze of domestic tariffs and the restrictions on exports, TGN applied for a suspension of payments in December 2008, and launched a new process to restructure its debt. These decisions led the Argentinean authorities to set up a formal monitoring of TGN's management.

Asia

Total markets natural gas transported through pipelines in Indonesia, Thailand and Myanmar, and, in the form of LNG, to Japan, South Korea, China, Taiwan and India. The Group is also developing its re-gasified LNG marketing business in new emerging markets.

India

In India, Hazira LNG Private Limited, a company in which Total holds a 26% interest, sold approximately 74 Bcf (2.1 Bm3) of natural gas in 2009, its fourth full year in operation, compared to 87 Bcf (2.5 Bm3) in 2008 and 76 Bcf (2.2 Bm3) in 2007.