* Cuts 2017 output target, 2015 cash flow goal
* Keeps 2017 free cash flow goal at $15 bln
* Hires new exploration head from Murphy Oil
* Hopes to start Yamal on time, get funding from Europe
* Sees no output from Kashagan, Angola LNG in 2015 (Recasts, adds analyst comment)
By Dmitry Zhdannikov
LONDON, Sept 22 (Reuters) - Total will step up asset sales and overhaul exploration after cutting its oil output targets and the French oil company also said it was seeking European funds to deliver a Russian gas project on time despite international sanctions.
Total, which has struggled with production outages in Libya, Kazakhstan and Nigeria, on Monday cut its 2017 output goal to 2.8 million barrels of oil equivalent per day from a previous 3 million.
France’s biggest company by market value and the West’s fourth biggest oil and gas group launched a “high-risk, high-reward” drilling strategy two years ago. But this has had disappointing results as high-cost investments did not lead to large discoveries.
“We have more than 15 major projects to fuel the future growth ... Two thirds of those projects are operated by us so that gives us confidence we will achieve the targets,” chief financial officer Patrick de La Chevardiere said at Total’s investor day in London on Monday.
De La Chevardiere also said Total believed its Yamal joint-venture project in the Arctic could go ahead on time despite international sanctions against Russia for its role in the Ukraine crisis.
“We had meetings with EU authorities and they confirmed that onshore Arctic gas projects are not under sanctions.” He said the $27 billion Yamal liquefied natural gas project could no longer raise dollar financing but could still get funding in euros, renminbi and roubles.
Total, like other big oil companies, has been under pressure from shareholders to cut costs and raise dividends as rising costs in the oil industry and weaker oil prices squeeze profitability.
It has been selling off businesses, such as its adhesives division Bostik, which French chemicals group Arkema has offered to buy for 1.74 billion euros (2.24 billion US dollar).
The company plans to sell $10 billion of assets in 2015-17, having hit a target of $15-20 billion of sales in 2012-2014.
Since 2010, Total has generated a total of $30 billion from assets sales, according to De La Chevardiere. That makes it one of the most ambitious sell-off programmes in the industry alongside BP’s $50 billion sell-off plan.
De La Chevardiere declined to comment on what assets the company could sell, adding that under the previous asset sale plan it had sold both upstream and downstream businesses.
The company’s investments would fall to $25 billion in 2017 from a peak of $28 billion in 2013 while operating expenses would fall by $2 billion per year by 2017.
The group stuck by an earlier target to generate cash of $15 billion in 2017 but cut the target for next year to $7 billion from a previous $10 billion. It had free cash flow of $2.6 billion in 2013.
Total’s share price was up 0.10 percent at 1505 GMT, after rising as much as 1.4 percent earlier. The stock outperformed its peers BP, ENI and Royal Dutch Shell on Monday and has also outperformed them since the beginning of the year with gains of 13 percent.
“The maintenance of the 2017 cash flow target was somewhat of a surprise, although given that further asset sales are included, it was not sufficient to boost sentiment significantly,” analysts at BMO Capital Markets said in a note.
The company also said it had hired Kevin McLachlan as senior vice president for exploration. He was formerly with U.S. energy company Murphy Oil, where he held the same position.
Asked about Total’s exploration track record, De La Chevardiere said: “When you follow the fact that we hire somebody from outside, you have the answer. The new head of exploration is coming from another company. The issue we had was to make discoveries.”
Total is part of a consortium developing the giant Kashagan oil project in Kazakhstan, which has been held up by gas leaks in the field’s pipeline network. The country has said it expects the field, one of the world’s biggest oil finds of recent times, to come onstream in 2016.
“We are discussing repairing the pipelines. It will be done by 2016 ... It is a last chance for us,” De La Chevardiere said.
Total also did not forecast any output contributions in 2015 from its Angola liquefied natural gas project, where a string of missteps has led to multiple delays. The Chevron-led venture expects the shutdown to last until mid 2015.
The CFO said he expected Europe’s refining capacity to continue to shrink because of falling demand and poor refining margins. “We will adapt our production to the market,” he said adding that the firm could cut capacity or sell refineries.
Chief Executive Christophe De Margerie told a conference call with investors on Monday that he was optimistic despite production target cuts.
“Total is still well positioned as one of the fastest growing global major companies between now and 2017,” he said. (1 US dollar = 0.7785 euro) (Reporting by Dmitry Zhdannikov. Editing by Jane Merriman)