Sept. 22 (Bloomberg) -- Total SA, the French oil refiner seeking to reduce surplus capacity, said Russian companies may bid for European plants as they pursue expansion abroad.

“They have a market to develop in Europe and may be interested to buy when we are interested to sell,” Chief Executive Officer Christophe de Margerie said today in a Bloomberg Television interview in New York. “We could do win- win deals with companies like Russians.”

Total has said it may sell refining assets to save costs as global overcapacity grows to an estimated 9 million barrels a day this year, almost twice the level in 2007. The Paris-based company, which is expanding in the Middle East and studying projects in Asia, is under pressure from the French government and unions to keep jobs at home, where it has six refineries.

“Integrated companies not present in Europe with access to crude may want to be part of this network where we consider we’ve been present for too long,” de Margerie said. “I can’t say it’s a huge bullish market but yes, we find buyers,” he said, citing Total’s sale of a 45 percent stake in its Vlissingen refinery to Russia’s OAO Lukoil in June. The stake in the 190,000-barrel-a-day Dutch plant sold for $725 million.

Total, Europe’s biggest oil refiner, agreed to the deal after exercising pre-emption rights over shares previously offered for sale by Dow Chemical Co. to Valero Energy Corp.

Access to Europe

Valero, the largest U.S. refiner, said in May it had been seeking to enter the European market for “quite some time” to take advantage of an expected recovery in fuel demand as the continent emerges from a recession. Lukoil said the acquisition would fit with its strategy of boosting refining capacity to process its own crude.

Total temporarily halted output at its Flanders refinery in northern France last week because of weak demand for oil products in northwestern Europe. The company has also stopped a crude-distillation unit at its Normandy refinery, where it plans to raise diesel production and reduce gasoline output under a nationwide restructuring plan announced in March. Some 555 refining and petrochemical jobs will be cut under the plan.

In a list of 61 European refineries, four of Total’s plants rank in the top 25 percent in terms of efficiency. Three are in the second quartile and rest are in the bottom half, the company said in a presentation to analysts last week. Total still has “less sophisticated refineries” in its portfolio, the company said, without specifying sites.

Rome Plant Sale

Total’s Leuna plant in Germany isn’t among refineries up for potential sale, de Margerie said Sept. 16. The French refiner may consider selling its stake in a plant in Rome, co- owned with ERG SpA, Total’s Head of Refining and Marketing Michel Benezit said May 19.

Total workers in France have threatened strikes to protest the possible sale of plants, accusing the company of wanting to “sacrifice” European refining capacity to expand in Asia and the Middle East.

“It’s my responsibility to prepare things, not wait to be faced with strong real concerns and be forced to adapt ourselves without getting the time to prepare,” de Margerie said today. “We are part of a global system. We’re not talking about closing refineries. We’re talking about selling.”

The European refining market is “certainly not an area of growth,” he said. “We have to adapt our system to new demand.”

Total is developing a 400,000-barrel-a-day plant in Jubail, Saudi Arabia, and has said it’s interested in having a stake in a second refinery in China. The company pulled a team in India that had been studying a possible refinery project there.

Margins Narrow

Refiners in Europe have idled plants, sought to sell others and slowed operating rates as the recession curbs demand for fuels, dragging down prices and squeezing profit margins for producers. Royal Dutch Shell Plc, Europe’s biggest oil company, said last week it would continue to cut costs at its downstream business, citing “significant pressure” on margins.

Shell said last month it may sell the U.K. Stanlow refinery. The company is also looking to sell its Heide and Hamburg refineries in Germany as well as Canada’s Montreal East plant.

Eni SpA, Italy’s biggest energy company, plans talks with unions to discuss the future of its Livorno refinery, which was shut down last week because of labor protests against its closure if sold.

To contact the reporters on this story: Tara Patel in Paris at tpatel2@bloomberg.net; Margaret Brennan in New York at mbrennan25@bloomberg.net.

Last Updated: September 22, 2009 11:48 EDT