Total is the fifth-largest oil company in the world and one of the most important players on the African scene. Christophe de Margerie, the president of the company, is frank, direct and outspoken with a style all of his own.
African Business: In this time of oil scarcity, what are the main challenges for you?
Christophe de Margerie: First, there is no shortage of oil. The current reserves are large and that gives us a good outlook for the coming years. The real question to ask is not whether there is enough oil, but whether, with respect to the environment, we can produce it in optimum conditions. Some countries are experiencing recurrent crises, of greater or lesser severity. Others have difficulties relating to issues such as security, legality or geopolitics. The recent situation in Libya is a good example of these constraints. Beyond these political restrictions, there are also technological limitations. We are constantly working to improve our rate of oil recovery and to push these limits further and go deeper.
Q: In times of crisis, are all these investments really necessary? Don’t they represent, in the end, an additional cost to the consumer?
A: On the contrary, investing increases the supply of oil and the consumer ends up paying less. Investing is not a choice but a real necessity. Investing enables us to prepare for a better future. We need to go and get oil from increasingly complex environments. We are faced with real technological challenges. The Pazflor project is a very good example. It represents a $9bn investment. The field is situated 150 km off the coast of Angola, operated under 1,000 metres of water. This is true technical prowess, a world first. The gas is separated from the liquids (oil and water) in the seabed at a depth where human intervention isn’t possible. You can compare it to the complexity of exploration in space.
Innovation is very costly, as are safety precautions and the protection of the environment. Oil exploration in Angola is a lot more expensive than digging a well in the desert in the Middle East. But our job is to go always one step further. Not just to be adventurous, but in order to get the all the oil we need. It is important to take into account the global environment and social issues.
We have developed a comprehensive policy, particularly in Africa, of being useful to the communities where we operate. Not only do we improve the areas around our facilities, but we have a much broader social vision. We are involved in training local people to learn new skills, not just for jobs related to the oil industry. In Angola, for instance, the authorities have accepted our plans for establishing schools of excellence. Our social endeavours are now very much appreciated.
Q: While there many positive aspects to oil, in Africa, this “black gold” is often a curse.
A: I would definitely say oil is a blessing. It is true that Africa is experiencing significant political tensions. Sources of conflict are numerous. They are related to diamonds and gold as well as oil. The problems come from the redistribution of wealth. Personally, I believe that Africa is moving in the right direction. A lot of progress has been made in recent years, in ethical behaviour, transparency and accountability. Even if the present situation is far from perfect, many things have improved and still need to be improved. But change cannot be imposed overnight.
We believe at Total that what is done out of conviction lasts longer than what is forced upon people. Oil should be a source of development. You only need to walk into the major African cities to see the changes. The global dynamic is good. All countries are not at the same level of development and each country needs to go at its own pace.
Q: How do you see your position in Africa? Everyone is rushing in, the Russians, the Chinese, the Americans …
A: Competition has always been an integral part of our business. Although the competitors are changing, we have always had them. Everyone tries to defend their territory but a competitor may also become a partner. Alliances exist and nowadays they are even necessary. These partnerships between companies bring positive benefits to all. The Chinese, for example, follow our code of ethics when working with us. They have no alternative. This works to the advantage of the oil producers.
Q: China is often presented in a bad light. What is your opinion?
A: The reality is often far more complex. Things are never ‘black’ or ‘white’, ‘red’ or ‘blue’. No matter the colour, it is best to avoid preconceived ideas – especially in the oil business, where property rights and counterfeiting do not exist. Each project is unique. We regularly share our technologies because we work in partnership. You only benefit from new technology for a short span of time, as advances are continually being made. You just keep one or two steps ahead.
Q: Apart from Francophone countries and Angola, what other countries are you interested in?
A: Globally, Africa is growing. In the past, oil was mainly found in French-speaking West Africa, Nigeria and Angola. Geological studies have reinforced the idea that there were oil and gas resources to be found in Eastern Africa This area extends from Kenya to South Africa. Many discoveries have already been made. Quite naturally, we are interested in this great potential. We are already present in Uganda, and we have an exploration permit in Tanzania.
Q: How do you negotiate with governments and other institutions?
A: We don’t interfere in politics, but we are in the middle of it! As in many things, greater transparency and candour are needed. But we must also learn to listen more to what the others have to say and what they expect from us. It is vital always to follow your own code of conduct. Being outspoken will remove any ambiguity. In our negotiations, the reputation of our company helps a lot. What do we bring? Our technology and know-how but also our social approach. This is where we can make a difference.
Q: Oil accounts for 55% of your business, gas, 45%. How do you integrate renewable energy, like solar, in your strategic choices?
A: Oil and gas remain at the very heart of our business. There is no problem of reserves, but of access to the oil resources. However, we can expand the energy range to offer more choice to our customers. We must develop new energy, which known as renewable. However, these energies will only remain as a supplement to fossil fuels.
And this will continue to be so for a long time to come! It may not be politically correct to say so. Some try to make us believe we can do without oil and coal. This is not (yet) true! I prefer to be more transparent and direct – which does not preclude the development of renewable energy in parallel.
In fact, Total is also investing in this sector. We have given priority to biofuels and solar energy. We are already associated with SunPower, the world’s third-largest solar company, in which we have a 60% stake. Solar power has its place in Africa. It can produce energy in remote areas.
Q: You are passionate about geopolitics. A new world order is coming about. How do you approach it?
A: It’s hard to say. We are in the middle of ‘evolution’ not ‘revolution’. Changes are happening with the arrival of new technologies. Everything is a little bit faster. Everything is so close and yet so far. We have the opportunity to travel in optimum conditions (aircraft, cars). At a time when everything is becoming global and all is automated, the need for a physical presence reasserts itself.
It’s good to communicate with emerging countries via the internet, but it is even better to get out there. More than ever, we need to explain what we are doing. Also, when we travel, we see things evolve. It is necessary to get out there to understand how it works. In the end, these meetings result in mutual enrichment. More prosaically, the demand for fossil fuels in these countries is very strong, which causes tension on oil prices. But, in reality, they consume much less than we do.
Therefore we must be careful when we Europeans or Westerners start to give lessons. At the same time, we need to remember that the notion of time is not the same everywhere.
Q: As a company, you have huge financial resources and influence. How do you use them?
A: The oil companies of 40 years ago were much more powerful than today. They were less rich, but they represented a colossal force. But in the collective imagination, the oil industry is a source of inexhaustible fantasy. Of course, we can help make changes. But we are not politicians.
An oil company should not replace the state. We must always try to explain and be patient. For a long time, we considered that we were always right and that others had to be kept quiet. This behaviour is happily no longer the case.