Total’s New CEO Has Some Very Big Shoes To Fill

You have to feel a little sorry for Patrick Pouyanné. Who, you might ask? Well, exactly. At midday last Tuesday within the glassy skyscraper of Total SA outside Paris, the
27 Oct 2014 10:25
Total’s New CEO Has Some Very Big Shoes To Fill
The newest Total service station, on Ratu Dovi Road in Laucala Beach, and others around the country underline the French oil company’s presence in Fiji. Photo: PAULINI RATULAILAI

You have to feel a little sorry for Patrick Pouyanné. Who, you might ask? Well, exactly.

At midday last Tuesday within the glassy skyscraper of Total SA outside Paris, the French energy giant’s board anointed Pouyanné its new CEO, to succeed their swashbuckling leader Christophe de Margerie, who died suddenly last Monday when his private plane crashed into a snow plow while taking off on a Moscow runway.

The announcement of de Margerie’s successor confirmed rumors among Paris business journalists that the company would appoint Pouyanné, who joined Total in 1997 and ran its refining and chemicals division.

Underscoring just how large a figure de Margerie was within the company, the board also announced that it is splitting its dead chief’s two-headed role of CEO and chairman, and is bringing back the former CEO Thierry Desmarest, de Margerie’s predecessor — a classically low-key, secretive French exec — for the chairman’s job until the end of 2015, at which point the two positions will again be combined.

If Pouyanné was not already painfully aware that he has very big shoes to fill, he could just switch on any French television channel or open any newspaper, which have all splashed de Margerie’s face since news broke of his death.

Typical of the tributes that have flooded in is one from French Prime Minister Manuel Valls, who said the country had lost “a great industry captain and a patriot,” and that de Margerie had “turned Total into a world giant.”

In fact, since he became CEO in 2007, de Margerie had turned himself into a world giant, too — something that went a long way towards transforming Total into the world’s fourth biggest non-government oil giant — after ExxonMobil, Royal Dutch Shell and Chevron — with a footprint across much of the planet.

De Margerie, 63, was everything French CEOs were not: Sociable and talkative, he seemed completely unguarded, unafraid to call something “bullshit” when he felt the word applied.

To the delight of us journalists, he hated his press handlers reining in his blunt talk.

He railed against Western sanctions in places like Iran and Myanmar, where Total had considerable interests, and for the past several months made it plainly clear that he intended to continue as normal his close relationship with President Vladimir Putin — for one thing, a $27-billion LNG deal in the Arctic is at stake — until Western sanctions and financing difficulties hobbled his plans.

His continual-motion leadership — he spent countless nights sleeping on rented private planes — made him a fixture at international oil conferences, the World Economic Forum in Davos, political meetings, and even recently at the opening of Iraq’s new embassy building in Paris, an event where he stood out among the workaday embassy staff and mid-level officials.

Within the gilded halls of the Kremlin and Persian Gulf palaces, many referred to him as “Christophe.”

Luckily for Pouyanné, de Margerie has done the tough work in cracking open those relationships, and launching operations in numerous new areas.

“Total over the last five years has revamped its E&P [exploration and production] portfolio quite substantially to remove its rather tired focus on West Africa and the North Sea, to be much more globally dispersed,” Iain Reid, an oil analyst at BMO Capital Markets in London, told Fortune on Tuesday, shortly before Total’s announcement.

With a natural optimism, de Margerie also firmly believed that oil prices would rise, and that the company could vastly expand its production while cutting its capital expenditure.

“There are a number of things that could go wrong given that he’s not there anymore, some of that based on his personality,” Reid said. “Christophe was always a bull on oil prices, and he made the thrust of Total reflect that.”

Still, Total’s new two-man team gives it deep experience at the top. Pouyanné, 51, has cut costs and boosted profitability in the company’s upstream business since 2012, shutting unproductive facilities and expanding others. Desmarest’s stint as CEO began in 1995, at a time when Total was in a tough contest against far bigger players in the industry, and he far expanded its position by the time he handed over to de Margerie seven years later.

Yet in an industry where state-run oil companies play an increasingly big role, both Pouyanné and Desmarest, 68, who is now chairman, will need to work hard to nurture de Margerie’s powerful friendships across the globe, many of which rested on the charisma of their deceased colleague’s charisma.

“His successor will find it difficult to reproduce his personal contact with the decision makers that de Margerie had,” Reid said.

The contrast in personalities is particularly evident. Desmarest, whom de Margerie followed as CEO seven years ago, and who was known for his far more closed style — not unusual in France — when the two men worked side by side.

In 1998, for example, Desmarest, then CEO, flew into Qatar with de Margerie at a time when Total was negotiating crucial natural-gas deals in the Gulf state.

They found themselves struggling to make headway in an awkward meeting with Qatar’s leaders, according to Total Executive Jacques de Boisseson, who was in the meeting.

“Thierry was a very formal person. Then at the end he turned to Christophe and asked if he had something to add,” de Boisseson recounted years later.

“Christophe talked about the World Cup, which was on in France at the time. Obviously it was not on the agenda. But it was just the kind of thing we needed to warm up the atmosphere,” he said. “It was a critical meeting, and maybe if he hadn’t oriented it that way towards the end it would not have been so successful.”

Desmarest and Pouyanné would do well to remember some lessons from one of France’s more colorful business figures.



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