May 15 (Bloomberg) -- Total SA, Europe’s third-biggest oil company, said falling costs will enable it to pursue an “ambitious” investment program and add as many as 200,000 barrels of oil equivalent a day to production by 2010.

Total is working on reducing project costs as early as this year, Chief Executive Officer Christophe de Margerie told an annual meeting of shareholders in Paris today.

“Costs rose a lot in recent years and it is time to inverse this curve,” de Margerie said. “This is what our teams are working on now.”

Total expects costs to drop as much as 15 percent this year compared with 2008. Capital spending, excluding acquisitions and divestments, is estimated at $18 billion although the company has warned this may not be met as projects are delayed and contracts renegotiated.

Total aims to raise production this year with five projects scheduled to start, including the Akpo oilfield off Nigeria, which came on stream in March, LNG plants in Yemen and Qatar, the Tahiti venture in the Gulf of Mexico and Angola’s Tombua- Landana field.

Global Shortfall

Still, the company predicts a global output shortfall of about 4 million barrels a day in 2015 as a result of project delays and lack of investment.

“Demand should remain constrained by supply over the long term,” the company said in a presentation on its Web site.

Total’s board expects to maintain the 2009 interim dividend at the same level as the 2008 final payout, Chairman Thierry Desmarest told the meeting. Last year’s dividend was raised 10 percent to 2.28 euros a share.

Desmarest confirmed he will stand down as chairman in favor of de Margerie next year. Desmarest, who turns 65 next year, told shareholders that the CEO will be a “very good” chairman.

Combining the roles of chairman and chief executive officer “is a good solution for the coming years,” Desmarest said in response to a shareholder question. “There is a time for everything,” he said, adding that separating the roles was right for the transition period following de Margerie’s taking over as chief executive in February, 2007.

“I was chairman and chief executive for 12 years. I don’t think that hurt development of the company,” he said.

Total reported first-quarter earnings that declined 35 percent as the global recession eroded energy demand, causing crude prices to drop and production to fall.

To contact the reporter on this story: Tara Patel in Paris at tpatel2@bloomberg.net

Last Updated: May 15, 2009 10:24 EDT