‘Acceptability’ is Total’s growth model

Over the past couple of years, as oil has gone from $50 a barrel towards $80, the shares of the European oil majors have significantly underperformed the market.

The flare-up on Thursday of the government of Kazakhstan’s unhappiness over the Kashagan field, in which Total has a more than 18 per cent stake, is a vivid example of the friction created by expensive oil.
Speaking to the Financial Times on Thursday, Mr de Margerie set out his vision of the right response to what he described as “a revolution” in the industry.

“The world has changed,” he said. “It is not any more a concern about ‘can you build more capacity and will you be faced with a problem of overcapacity?’, as it happened in the ’70s and ’80s. It is much more a question ‘can you [meet] the demand?’ Because the demand is there and the capacity we have is not enough.”

The reason is that the countries that control most of the world’s oil and gas are granting access to the international oil companies only on their own terms.

“There is a wish of certain countries to keep their reserves for the long term. They are making sufficient money with what they produce, they have the feeling that it’s good for their own citizens to keep it for the future . . . and they don’t want to develop those reserves too fast,” Mr de Margerie said. “And can you blame them? I am not sure.”

For Total, that means the byword for its operations is “acceptability”.

The company needs to be able to persuade resource-rich countries to give it access. “There is what we call the Total model for growth, which is how to make you accepted,” Mr de Margerie said.

“The old sustainable development was to say ‘we are nice, we talk to the communities, we give books to the schools,’ which was good, but is not enough any more. Now you have to prove that what you bring to the local economy is needed and can be used for development.”

MSNBC