OBJECTIVE: TO CREATE AN OIL MAJOR WITH STRONGER GROWTH POTENTIAL

EXCHANGE PARITY: 4 TOTALFINA SHARES EFFECTIVE JANUARY 1, 1999 FOR 3 ELF AQUITAINE SHARES

TOTALFINA today announced its decision to launch a public exchange offer (OPE) for ELF Aquitaine (ELF) and proposes to exchange 4 TOTALFINA shares for 3 ELF shares, or a premium of 15% based on the latest closing prices, which establishes a value of 42 billion euros for ELF. When calculated based on the average price for the past month and the past six months, the premium is 19% and 21% respectively. TOTALFINA will not be required to accept for exchange any ELF shares or ADS unless 66.67% of ELF shares, on a fully-diluted basis, as determined on the closing date, are tendered.

Commenting on the transaction, TOTALFINA's Chairman and CEO Thierry Desmarest stated at the July 4 Board of Directors meeting:

"The combination of TOTALFINA and ELF is a large-scale industrial project driven by the exceptional strategic fit of the two groups. This will benefit the customers, employees, and shareholders of the new group thanks to the increased competitiveness of each segment and the outlook for stronger growth.

"I believe that it is necessary today to join forces to assure continued solid growth and to take our place as an oil major of the first rank at a time when the industry is restructuring on a global scale.

"Joining the two companies will allow us to achieve annual pre-tax synergies expected to aggregate 1.2 billion euros over a three-year period. The realization of the synergies will be facilitated by the cultural similarities of the two groups and achieved in a manner respectful to the social policies that we are committed to".

Combining the two companies will lead to significant improvements in efficiency in many areas: optimizing exploration, refining, logistics, and marketing; adopting best practices; reducing purchasing costs and general overhead. The transaction should entail a reduction of 4,000 positions worldwide, with about half of those in France. The reductions will occur over three years through a combination of natural attrition and early retirement, as well as through other appropriate plans after consulting with employees' representatives. This merger need not lead to forced redundancies. At the same time, projected growth for the new group will permit substantial recruitment to continue.

The outlook for each segment is strengthened:

In Exploration-Production, the new group will have a balanced portfolio of nearly 10 billion barrels of oil equivalent (boe) in reserves, representing 13 years of production. Due to the number of large, low-cost projects, hydrocarbon production is projected to grow by about 40% by 2005. This growth is double the average rate of our peers. Furthermore, the geographic overlap, notably in the North Sea and in Africa, should permit a substantial reduction in operating costs.

In Refining-Marketing, the combination of the European positions around 6 main hubs will constitute a stronger and more focused platform and will permit the integration of petrochemicals with refining. The merger will allow substantial savings of investment with regard to the new European environmental standards. The logistics of the two groups will be optimized.

The profitability of Marketing in Europe will be improved as a result of better coverage, with market share of about 12%. In Africa, the new group will become the leading distributor in this high-growth market.

In Chemicals, the new group will be a major player. The petrochemical positions will be strengthened both in monomers as well as in polymers, such as polyethylene, polypropylene, and polystyrene. In Specialty Chemicals, the new entity will capitalize on strong complementary positions built by both TOTALFINA and Elf. The new group will pursue self-financed growth, focusing on high-return sectors. Marginal activities will be divested.

Divestitures are projected to provide more than 6 billion euros over the next 2 years, including partial disposal of the Health segment.

In addition to the growth and productivity programs previously announced separately by the two groups, the creation of the new entity is projected to provide a recurrent improvement in operating income of 1.2 billion euros in three years. The success of these efforts would produce very strong earnings growth of at least 20% per year, assuming a constant environment, over the coming years.

In terms of cash flow per share, the combination is projected to be accretive by 6% in the first year following the merger, and in terms of earnings per share by 4% in the second year.

This offer was filed today. TOTALFINA hopes that, although unsolicited today, it will soon become friendly and gather the largest support of both companies. The initiators of the offer will ensure that the management structure of the new entity is set up in a balanced manner.

The Board of Directors of TOTALFINA met on July 4. By approving the present offer, it declared its confidence in the success of the new group, which will take its place amongst the global majors.

Confident in the future of the new group, Thierry Desmarest, with the support of the Board of Directors, stated his commitment to a policy of strong growth, which will come primarily from investment in the Upstream segment. This is in keeping with the strategies that have been followed up to now at TOTALFINA. Within 5 years, the Upstream segment should comprise half of the capital invested with the balance being split equally between Downstream and Chemicals.

The assets and skills developed by the teams of Elf coupled with the strengths of TOTALFINA will permit increased growth and improved profitability for the new entity.