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Total's CEO on energy transition

Tuesday, June 22, 2021

Patrick Pouyanné, chairman and CEO, Total, shared his thoughts on the energy transition, during Baker Hughes Annual Meeting.

Up to now, 'the strategy of Total has been fundamentally the strategy of a supplier, to be available and spread out around the world,' said Patrick Pouyanné, chairman and CEO, Total, in an interview during Baker Hughes' Annual Meeting in February.

'Today, with [the] energy transition, we must think to what customers are requiring. The level of green energy and the level of price. It changes the paradigm for us.'

'Transition for me means a journey, a journey where we have to adapt.
With a clear target (carbon neutrality by 2050), but not thinking it can be done in black and white, and not forgetting the affordability of this transition.'

'If we want to go to carbon neutrality, we will have to do it with our customers.'

'Some corporate customers are deciding themselves to green their electricity and themselves produce their energy. The relationship is fundamentally changing.'

'That's the reason why Total is transforming its strategy, going to customers to propose different products.'

People's desire for energy is different in different places of the world, he said. 'When you are in emerging countries, obviously you want to have clean energy but also an affordable one.'

To get to carbon neutrality, this public sector [government] are very important, they will set some policies. If we don't have some policies in place it will be very difficult to go to carbon neutrality,' he said.

'We have seen that Europe is committing itself to carbon neutrality, which will have an impact to the cost of energy in Europe.'


Mr Pouyanné was asked if Total's investors are ready to accept that profitability will be lower going forward, because of the costs of the energy transition. They should see it as an investment in the future, he replied.

'When I joined the industry (20 years ago) we were speaking 20 per cent [returns],' he said. 'Today the real interest rate is zero rate. To have 15 per cent [today] means the risk premium is much higher than it was before.'

'We need to invest in order to deliver future cash flows by 2030 and beyond.'

'When we have decided in Total, ten, twelve years ago to engage in a LNG adventure in Russia, there was no profitability. In 2020 we believe to have strong dividends from these investments.'

'When you invest in a new field of energy, you know it will take time before you will be able to deliver some cashflow out.'

Total needs to maintain a profitable business at the same time. 'We have [the] lowest cost among producers of $5 / barrel. I need this to invest in [the] future cashflows of the company.'

'We are trying to find the right balance between businesses fundamental to the world today, because it relies on oil and gas, and to reinvest a large part of it in new energies.'

Asked about why Total pulled out of the American Petroleum Institute, he said, 'At a certain point we need to be consistent between what we want to address as a strategy, and membership to some organisations.

'We will review the consistency between these memberships and our own climate ambitions. We consider some of the organisations to which we are a member are not aligned with the objectives we think of the world.'

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