HOUSTON—The Permian Basin may be the crown jewel of soaring U.S. oil production as the industry closely watches the moves of shale players in the basin, but France-based Total is taking a pass for now unlike some of its larger peers like ExxonMobil and Chevron.

Total CEO Patrick Pouyanné said he has nothing against the Permian, calling it an incredible area for the lucky companies that have secured positions in the basin that is now considered expensive to access. But he doesn’t believe the Permian is the best allocation of capital for Total.

“When I think to the future areas of investment for Total I need to target 200,000 or 300,000 barrels per day [of production] if I am a serious player” instead of 50,000 barrels per day (bbl/d) Pouyanné said during CERAWeek by IHS Markit on March 5. He later added, “Having said that never say never. … [But] it is not a priority.”

Pouyanné spoke during the opening day Global Oil Dialogue with IHS Daniel Yergin the same day the International Energy Agency (IEA) released a report stating the U.S. is expected to lead the world in oil production growth. With the Permian in the driver’s seat, liquids production in the U.S. is forecast to hit nearly 17 million barrels per day (MMbbl/d) in 2023, up from 13.2 MMbbl/d in 2017.

The IEA outlook shows Permian Basin’s output could double in about five years. Some of the Permian’s top acreage holders—including Occidental Petroleum and Apache Corp.—have been growing production in the basin using technology and improved drilling techniques to add value.

Total strives to add value in the company’s strong areas, specifically in the deep water, LNG, the Middle East, Africa and the North Sea, according to Pouyanné.

But the company is selective about its assets and where it allocates capital.

“When we speak about long-term assets we select low-cost oil. I love the Middle East,” Pouyanné said. The company has assets in Abu Dhabi, Qatar and Iran, where he said Total’s Phase 11 South Pars gas field development is progressing as planned.

The French major recently bought working interests in the Canje, Kanuku and Orinduik blocks offshore Guyana, an area where ExxonMobil has made seven discoveries in the nearby Stabroek Block.

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The company also scooped up Marathon Oil Corp. subsidiary Marathon Oil Libya Ltd. for $450 million. The deal included nonoperated interest in the Waha concessions in Libya.

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In addition, Total will gain interests in the North Sea’s Culzean gas HP/HT field, the Statoil-operated Johan Sverdrup development and assets offshore Denmark—among others—through its $7.45 billion deal to acquire Maersk Oil and Gas. Pouyanne said the deal will close March 8.

RELATED: Total, Maersk Oil Deal Creates North Sea Powerhouse         

“Playing to our strengths has much more chance to create value than just trying to fill the gap,” Pouyanné said. He recalled learning lessons in the last decade, having made some mistakes when acquiring some assets because the company had the financial capacity such as oil sands in Canada, coalbed methane in Australia and shale gas in the U.S. “We were not able to add pure value for our investors. Our mission is to provide energy in a way [that] we add value.”

In addition to targeting low-cost oil, Total also aims to produce more gas as demand for both natural gas and LNG increases.

Yergin pointed out that Total is world’s second largest LNG player, a position it gained through the acquisition of Engie’s LNG assets. The acquisition will boost Total’s managed LNG volumes to about 40 million tonnes per year by 2020, placing it behind Shell. That equates to about 10% of the market, Pouyanné said.

“In this global market, size will matter,” particularly with transportation logistics and facilitating a global strategy, he continued, rattling off a few of Total’s interests in other LNG assets such as Russia’s Yamal LNG, Cameron LNG in the U.S. and PNG LNG in Papua New Guinea. “Many points of production, and many customers, want the gas terminal to help us make optimization.”

RELATED: France's Total Buys Engie's LNG Business For $1.5 Billion    

Total’s five key target areas to add value are typically considered long-cycle opportunities with long development times, compared to short-cycle shale plays which are capable generating cash within a year or two after development.

However, Pouyanné said Total has about 1 billion barrels of short cycle, which he defines as being able to turn on and off contracts and capex.

“In conventional offshore—in Gabon and Africa—we can organize that,” he said, adding he understands the logic of short cycle and there is plenty of it. “It’s a matter of contracts.”

Velda Addison can be reached at vaddison@hartenergy.com.