OBG talks to Christophe de Margerie, CEO, TOTAL

Interview: Christophe de Margerie

Is there a need to balance increasing oil and gas production with a dampened growth outlook?

CHRISTOPHE DE MARGERIE: That depends how far ahead you look. There is in fact no clear consensus on the level of energy supply and demand right now, considering various uncertainties to do with Iran, production in non-OPEC countries, and the move away from nuclear power post-Fukushima. But while there are concerns about the impact of the global economic slow-down on energy demand in the short term, the long-term picture is one of increasing demand as emerging economies modernise and the world’s population expands.

Global energy demand is expected to double by 2050 – and the complexity of meeting needs will increase as resources become harder to reach, more expensive and technically more challenging. The largest part of this demand will come from outside of the OECD, suggesting that our industry will need to develop new partnerships and operations that serve an increasingly global marketplace. The world’s population is expected to reach 9bn by 2050, up from 7bn today, so the present-day scenario is arguably of less concern to global energy firms than providing secure, affordable energy for the future, in ways that minimise environmental impact.

What future role do you expect liquefied natural gas (LNG) to play in global development?

DE MARGERIE: We see it playing a major role in the development of many countries, and accounting for a significantly increased share of the global energy mix. Gas is expected to become the second-largest energy source after oil by 2030, and gas from unconventional sources could represent 20% of total gas supply by 2035. We also expect the growth of LNG to outpace that of the gas sector in general, as it remains the only viable technology to import gas into markets lacking domestic supplies or access to nearby reserves.

Qatar’s emergence as the world’s largest LNG exporter has been central to its increasing role in world affairs and the diversification of its industrial base and its economy at large. This model of economic expansion has the potential to be exported elsewhere as other countries seek to exploit their gas reserves.

Total has been active in the LNG sector since the 1960s. Based on our experience working with national oil companies on LNG projects in Qatar and elsewhere, we understand that the sector is based on partnerships.

Any industry that places such a heavy emphasis on trust has positive implications for global development.

Has security and diversification of supply become a concern for gas importers?

DE MARGERIE: Improved access to sources is a critical aspect of energy security. Environmental concerns have imposed restrictions on shale gas development in certain countries, but the technology exists to manage these concerns. The oil and gas industry needs to work harder to earn the public’s trust and to reassure stakeholders that we have the capabilities to develop hard-to-reach sources effectively and responsibly.

Flexible marketing models are also needed to ensure LNG exporters reach those markets with the highest demand. As an integrated energy company, Total has developed capabilities as a marketing partner across the globe in addition to the support we provide in the upstream sector. This approach will become increasingly important if international oil companies are to continue to add value to the relationship with the national oil companies of host countries. We must also reach agreement on pricing. We are living in an age where complex fields are increasingly the norm. LNG export projects are costly and require long-term investment.

Wider adoption of oil-indexed gas contracts would allow for greater price visibility, helping to manage the risk involved in bringing large-scale projects to market.

Meeting the projected future demand for energy requires an integrated mix. Regulation that respects the value of every viable energy source, whether hydrocarbons-based, nuclear or renewable, is needed to ensure global requirements are met sustainably and affordably.