Total warned of cost of billions as fears mount over gas leak

FRENCH oil giant TOTAL could lose billions of pounds if its North Sea gas leak leads to an explosion, analysts warned yesterday.

The firm, which has seen $9bn (£5.7bn) wiped off its market capitalisation since Tuesday when the leak at its Elgin platform began, faces losses from $200m up to $10bn in a worst-case scenario of an explosion, according to analyst projections.

Bank of America analysts estimated an explosion could cost $10bn, hitting Total’s earnings by 10 per cent, but other analysts said the most likely outcome was that the leak would be plugged – with the total cost depending on how long this took.

CM-CIC Securities estimated in a worst-case of a six-month projection halt, costs would hit $2.7bn, but said a best-case scenario of a quick solution would reduce costs to just $150-200m. Exane BNP analysts said they would cut their projection for 2012 earnings by two per cent if it took six months to repair the leak and two relief wells costing $44m each were needed.

But Total, which owns 46.2 per cent of the operation, which accounts for 2.5 per cent of its overall annual production, yesterday played down the risk of an explosion and said plugging the leak was “a question of days”.