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2010-01-22 18:29:48
By VIVIENNE WALT Friday, Jan. 22, 2010
It is past midnight in a jet high above the Persian Gulf, and one of the key
figures in global energy shows no sign of retiring. Instead, Christophe de
Margerie, CEO of the French oil giant Total, zeroes in on a favorite target:
criticisms of oil companies by environmental groups, gathered in Copenhagen for
the U.N. Climate Summit. "People say they are inventing electric cars," de
Margerie says, puffing on a Marlboro. "Well, where is the electricity coming
from? Flowers? Maybe someday. But what is available now is oil and gas."
The argument is delivered in de Margerie's trademark style: blunt and
impassioned, with an almost cocky certitude. He credits his confidence to years
spent traveling "moving my ass," as he calls it and witnessing the world up
close. All that time on the road has convinced him of this: oil supplies will
soon run seriously short, and until we come up with something better we need to
make sure we suck every last drop from every last nook and cranny on the
planet. "We don't know everything," he says. "But on oil reserves and
production we know a lot. And it's our duty to speak out."
It helps that the person doing the talking heads one of the biggest energy
firms on the planet. A decade after it bought its French competitor Elf
Aquitaine, Total has ballooned into the world's sixth largest publicly traded
energy company, according to Energy Intelligence Research. By market
capitalization, the company is worth around $150 billion and returned profits
in 2008 of $21 billion. From its skyscraper headquarters on the edge of Paris,
de Margerie oversees operations and 97,000 staff in more than 130 countries.
But as the company has grown, so too have doubts about how Total, and other oil
giants, will survive the coming decades. As oil becomes increasingly difficult
to find and extract, and as governments embrace cleaner sources of energy,
won't those most invested in finite resources become irrelevant?
De Margerie doesn't think so. The 58- year-old took over at Total in 2007, just
as anxieties about global warming took off. With his rumpled look and a
moustache resembling two squirrels' tails, he looks more like a college
professor than CEO of one of the biggest companies in the world. An avid
conversationalist, he is soft-spoken, with old-world ways: he kisses my hand
when saying goodbye, and prods a Camembert cheese over dinner before
tut-tutting "Pas bon." Samuel Ciszuk, an energy expert at the consultancy IHS
Global Insight, describes him as "a mix between the French aristocrat and the
wildcatter."
De Margerie claims he has always been shy and has learned to "listen to people,
from the hotel doorman to the King of Saudi Arabia." He might as easily have
joined the many de Margeries in the French diplomatic corps. Instead, he
stumbled into the oil industry by accident, when, at 22, he took a summer
internship at Total because its headquarters was an easy walk from his home in
western Paris. It was 1974, the middle of the Middle East oil crisis. "People
said: 'Are you crazy? This company will go bankrupt in six months,'" he
recalls. But the political turmoil around oil intrigued him. "It's the most
fascinating industry in the world," he says.
De Margerie is renowned for running late for meetings. Jacques de Boisseson,
Total representative in China, says he was on tenterhooks during de Margerie's
visit to Beijing last year, when the Total chief kept Chinese energy executives
waiting while he chatted to a hotel porter. Indeed, says de Boisseson, his
boss's ability to "get very close to very different people" is a valuable
icebreaker when negotiating. During talks with Qatar officials over a contract
in 1998, with the soccer World Cup under way in France, "Christophe began
talking about the World Cup," de Boisseson says. "It was just the kind of thing
we needed to warm up the atmosphere. He changes a meeting with his personal
touch." At a security summit in Bahrain last December, a former British
diplomat said he was amazed when de Margerie handed him his business card. "I
couldn't believe that this ordinary-looking bloke I was chatting to was the
head of Total," he says.
Ordinary does not mean humdrum. In an industry famous for being opaque, de
Margerie speaks openly about the nightmare scenario oil shortages that most
energy firms prefer to avoid or deny. De Margerie says the possible effects on
the world economy of dwindling oil supplies are so great "I am not prepared to
shut my mouth." Shortly after taking over at Total, he jolted oil executives
at a London conference by stating the industry would be unlikely to produce
more than 100 million barrels a day, far below the 120 million or so the
International Energy Agency estimates the world could produce by 2030, and
which will be needed for Asia's galloping growth. De Margerie now says 90
million barrels a day is "optimistic." Audiences regularly ask him when he
thinks we might use earth's last drop of oil, and de Margerie says that date is
decades off. But it's important to realize, he says during an interview with
TIME, "what will happen very soon is that oil supplies will not cover demand.
That won't mean there is no oil. There are oil reserves, but you will need to
invest billions and billions to get it."
De Margerie's warning carries another message: energy companies need to produce
oil and gas anywhere they can. That argument pits him against human-rights
groups, who accuse Total and other oil majors of bolstering corrupt and
repressive regimes. Last November, Greenpeace activists picketed Total gas
stations to protest the company's plans to explore Canada's tar sands, which
they fear will cause environmental damage. And despite the prospect of tougher
sanctions against Iran, Total is negotiating joint gas production there with
China's CNPC. De Margerie rebuffs suggestions that Total should stop selling
refined gas to the Islamic Republic. "That embargo will not work," he told a
skeptical audience at Columbia University in New York City last November, when
asked why he does business with Iran. Instead, he believes blocking gas imports
will bolster Iran's government's opposition to the West.
De Margerie's argument that companies are compelled by necessity to deal with
undesirable countries leaves many unconvinced. "Oil companies say they have to
operate where bad guys are running countries, because that is where oil is
found," says William Ramsay, a former U.S. State Department official who now
heads the energy program at the French Institute for International Relations.
"The rest of the world does not quite buy that."
Nothing has caused a bigger public relations headache for Total than its
dealings with Burma, where a bloody 2007 military crackdown against democracy
protesters sparked global outrage. The company produces gas in the Andaman Sea
and pipes it across Burma, selling some to the Burmese government and the rest
to Thai power stations. Human-rights organization EarthRights International has
reported the use of "forced labor" along the pipeline, which Total operates
with Chevron and Burmese energy companies (Total denies any labor abuses). It
has also claimed that Burma's regime is dependent on the billions in revenues
it receives from Total and Chevron. De Margerie says Total has established a
"code of conduct" in Burma, and claims if Total sold its assets there,
community programs it has implemented for locals would likely be scrapped.
The controversy continues; even French President Nicolas Sarkozy has expressed
discomfort about Total's operations in Burma. Critics sense Total officials are
growing more sensitive to the issue. "They used to shrug their shoulders and
say: 'What has that got to do with us?'" says Diarmid O'Sullivan of Global
Witness, a London organization that researches corruption in natural-resources
deals. "Now the game has really changed ... Eventually transparency will be a
selling point for them over the Chinese oil companies."
Still, de Margerie is frustrated at the continuing criticisms over Burma. "Who
is telling us who are the cowboys and who are the Indians?" he said at Columbia
University. "People who have never been in those countries." Then, calmer, he
stressed that a Total withdrawal would leave Burmese residents more vulnerable.
There are few better places to gauge the task Total faces in difficult
countries than in Yemen, where the company launched a gas pipeline and export
port last November. The $4.5 billion project took 11,000 people four years to
build and required agreements with around 20 tribes, in part because the
government, which is grappling with an armed rebellion and growing al-Qaeda
recruitment among its unemployed youth, has only a tenuous hold over much of
its impoverished country. Total employees are barred from leaving the capital,
and travel with armed escorts. "This is one of the riskiest areas of the
world," says Total's exploration and production chief Yves-Louis Darricarr re
on the flight to launch Total's gas-export plant on the Red Sea. "No one
thought we could do it." De Margerie did. "Yemen was about audace," or
audacity, he says, referring to one of the four guiding principles he has
defined for Total since taking control. "You have to be bold."