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Total's CEO Patrick Pouyanné on carbon

Thursday, January 23, 2020

Patrick Pouyanné, President and CEO of oil major Total shared his views on how the oil and gas industry should approach carbon - and what Total is doing.

'It is quite an important moment for industry, everything is changing very quickly,' said Patrick Pouyanné, President and CEO of oil major Total, speaking at a plenary session at Aberdeen's Offshore Europe event on September 3.

'We can all see the scale of the challenge we face [delivering] reliable, affordable and clean energy. All these words are important, but society puts emphasis on the last one. All citizens are asking us to find ways to solve climate change,' he said.

The North Sea oil and gas industry made big efforts to improve since 2014. A $30 oil price 'could have been an end to the basin. These efforts saved the basin [with the] principle of discipline. Barrels per head count improved 57 per cent from 2014 to today,' he said.

'But it remains one of the most expensive places to operate. And the North Sea is not the best around the world for safety.'

When it comes to carbon, 'improving energy efficiency of operations is key,' he said. 'Everyone should know carbon dioxide emissions of every site. It is a way to motivate people to contribute to the challenge.'

'I'm a supporter of what the UK government did for carbon prices. UK has demonstrated it is not so complex,' he said. The price was '£20 tax per tonne - not $100 - and it worked [in disincentivising coal].'

With carbon capture, 'we could see a future of North Sea becoming a sort of giant cave of CO2.' To get there, 'we need to intensify activity, for pilots, R+D, CCUS chain.'

'It will be fundamental if we want to produce steel, concrete around the world.'

Mr Pouyanné was asked if the company can give dividends to shareholders and also be sustainable. 'Shareholders will not just want dividends today, they want dividends tomorrow,' he replied. 'Dividends for me are a consequence of being sustainable. We never increased a dividend in 30 years.'

'If I want to be sustainable, I need to invest in oil, oil which is profitable, competitive. We don't explore in the Arctic, because it is not competitive.'

'We have invested $10bn in being a low carbon power producer [covering] gas or renewables. This will continue to grow. We invest $1.5bn to $2bn this year in this business unit. Some people tell me it's too small. But it is not so small compared to a utility.'

'The challenge is finding [low carbon power] projects, he said. 'You have to get access to land to make your projects.'

Total has set up a purely online electricity retail company, which now has 6m customers in France and Belgium. It has a very low-cost model, with 600 staff, replacing a company which had 10,000 employees. 'I can tell you we make money - we don't make big money,' he said.

It needs a certain scale to work. 'It is a business where you need to amortise fixed costs - marketing.'

The company needs to continually improve its portfolio of oil and gas projects. 'We are in commodity business. I don't set the price of oil. I can act on my break even,' he said.

The company has 'rotated' more than 30 per cent of its upstream portfolio over the past few years. 'We replace high cost assets by low cost assets. It's fundamentally a business of assets.'

The company acquired Maersk Oil in 2017 and Anadarko's operations in West Africa in April 2019, as part of efforts to acquire more low-cost assets. But now the company is more in a divestment phase. 'We need to divest $10bn' he said.

Total manages its risk to geopolitical upheaval by having operations in many parts of the world. It has a background of being obliged to develop outside its home country, France, because France did not have oil. At the moment, 'number one for investment is Russia, number two is US. I try to balance between Mr Putin and Mr Trump.'

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