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Page added on October 27, 2014

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The supermajor leader who walked a different path

Business

The tragic death of Christophe de Margerie, the chief executive of the French oil giant Total, in a plane crash at a Moscow airport last Tuesday prompts us to pay tribute to his career, and to reflect on what it means to be a big oil company chief today.

The convivial Mr de Margerie, admired by Total staff, was one of a select group of big oil chiefs of recent years whose personality shaped not only his company but the wider industry. BP’s iconoclastic John Browne was a deal-maker, early to acknowledge climate change, but who fostered a risk-taking culture that was ultimately disastrous. Lee Raymond of ExxonMobil, a remorseless, uncharismatic engineer, perfected the Exxon machine he inherited.

Instantly recognisable from his splendid moustache, Mr de Margerie was also a deal-maker, spending much of his career in the Middle East and appreciating the importance of relationships and political insight. With less of a US presence than the other supermajors, Total had always had a strong Middle Eastern and African base. That meant coping with political turmoil, although the company also had to pay settlements over past corruption cases.

Under Mr de Margerie, Total pushed strongly to expand its role in Abu Dhabi, completed a US$5 billion liquefied natural gas plant on the barren southern shore of Yemen, entered Iraq and – with less outrage from Baghdad than ExxonMobil encountered – also the autonomous region of Kurdistan.

Unusually outspoken, Mr de Margerie dared to say what his fellow chiefs only thought. He advocated dealing with Russia and Iran. He was, at least at one time, a believer in “peak oil” – the idea that global oil production was about to begin an irreversible decline – and this may have encouraged some of his company’s investments in oil sands, nuclear and solar power. He was against drilling for Arctic oil, though supportive of gas there.

But Mr de Margerie’s career is also a reminder of how challenging it is to make a real difference in global energy. Even ExxonMobil, with about 3 per cent of global oil production, has nothing near the clout that Apple or Google have in their respective industries. The oil industry moves and changes much more slowly and is not subject to the whims of consumer tastes, but a supermajor company invests $20 billion or more annually in projects that have to be robust over decades.

They face challenges that have been around since the dawn of the industry but have become more acute over the last decade or so. Their legacy assets are depleting and they have struggled to create new core areas – constrained by Middle Eastern and Russian politics, but also by their failure to crack the shale code. They still struggle with the burden of past decades of underinvestment in assets and people, leading to soaring costs, while oil and gas prices head down. Mr de Margerie’s successor, the refining chief Patrick Pouyanné, has gone with the industry trend in instituting a cost-saving programme.

Like Shell but perhaps more than the other supermajors, Total stressed technology, such as building the world’s largest supercomputer, Pangea. But an ambitious exploration programme has not yet paid off. This is not unique to Total – Shell, Statoil, Repsol and Maersk have all had similar problems. It is disappointing, given all the technology thrown at it and the opening of new frontiers in deep water.

The modern oil chief also has to deal with a near-impossible burden of non-traditional issues and stakeholders – Appalachian environmentalists, Kurdish communities, Burmese human-rights advocates, French labour unions. Beyond this is a global public voracious for energy but sceptical and hostile to major oil companies.

Total will always do things a little differently from the Anglo-Saxon supermajors. It is a tribute to Mr De Margerie that its employees feel his loss acutely. Mr Pouyanné has to match that unique legacy.

the national



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