Adapting to changes – sticking to the strategy Life is more complex today than it was just a few decades ago for the industry and for the French energy giant TOTAL. Keeping to its strategy while adapting to the changes has been their key to success. Last year TOTAL achieved a remarkable operational and financial performance and was one of the world’s fastest-growing, best-performing oil companies.
As France’s largest corporation and the world’s fourth-ranked oil and gas company, TOTAL operates in more than 130 countries across the oil industry chain, from oil and gas exploration and production to gas downstream, refining, marketing, trading and shipping operations. It is also a world-class chemicals company. TOTAL delivered remarkable results in 2004 and even managed to improve on those results last year.
“The continuation of our exploration success, the launching of Yemen LNG and the acquisition of Deer Creek in Canada, among other things, have allowed us to increase the level of proved or probable reserves to 20 billion equivalent barrels at the end of last year, representing more than 20 years of production at the current rate,” explains Jean-Marie Guillermou, Senior Vice President of Development and Operations Techniques in TOTAL. He has worked for the company since 1975, and has been an expatriate at an impressive list of offices covering all five continents.
“The business has clearly changed over these years,” Mr Guillermou admits. “Life is more complex now. Everything has become more complicated and the competition has increased. The contractors have become busier and busier, it has become harder to get access to the drilling rigs, and the price level for equipment and rigs has increased. In addition, it has become tougher to explore for the reserves – and, of course, everything has to be delivered on time and on budget.”
More powerful nationals
Even the relationship with the national oil companies has changed. The national companies used to be interested in the whole range of services the majors could offer, including financing. “Today they are richer and less inclined to open up for new opportunities. This means fewer openings and stronger competition for companies like us. In addition, we are seeing new actors from countries such as China or India joining in at full speed,” Mr Guillermou says.
The market conditions have also changed. Today the industry sees less contractors as a consequence of all the merges which have taken place. There are more activity and higher prices. In addition, there are also higher risk levels with increased demands relating to performance quality.
Despite this challenging development, TOTAL has managed to be at the forefront of all technological aspects – worldwide. TOTAL realised early on the importance of a bigger portfolio of projects for achieving growth throughout this period.
“10–15 years ago, we used to have three or four major projects running simultaneously. Today, we have ten – all of bigger size than before,” he says. In addition, all TOTAL’s projects today are of a more complex and demanding character. He mentions factors such as deep waters, heavy oils, rough conditions and large LNG plants. “We’re an operator that is able to manage big projects and this is a clear competitive advantage. Here we can make a difference,” he says.
During his time in TOTAL, Mr Guillermou has experienced two major mergers through the acquisitions of Fina and Elf. There are always challenging aspects connected to such events, but he assures that these processes went without a hitch and have added considerable value to TOTAL, which today truly stands out as one company.
Mr Guillermou emphasises his company’s investment strategy, stating that continuous investments irrespective of oil prices or economic cycles have ensured TOTAL’s position today. Keeping to its investment strategy has been TOTAL’s key to success and has ensured the foundation for its current global operations.
Another factor that ensures growth is research and development (R&D). TOTAL has constantly prioritised innovation, and has chosen an integrated R&D organisational model. A slim R&D unit has been established, covering the “growth projects” – as they are called – always consisting of dedicated personnel from the whole organisation and from various professional disciplines.
“When a technical challenge turns up, some “champion” will volunteer to come up with an idea for a solution. This is an ordinary start for a TOTAL R&D project,” says Mr Guillermou.
Responsible corporate citizen
As TOTAL’s portfolio of assets is evenly distributed among the world’s leading petroleum provinces, the company operates in many different cultures. However, it has committed itself to meeting the growing energy demand while consistently acting as a responsible corporate citizen. This means that Corporate Social Responsibility is a key word.
“We have developed a strict code of ethics and take our responsibilities very seriously,” says Mr Guillermou and assures that, “Openness is in our own interest.”