Our Principles and Priorities
"We do what we do to provide clean, safe and competitive energy to as many people as possible."
Patrick Pouyanné, Chief Executive Officer of Total
"We will continue to build relationships of trust with our stakeholders."
In his eight years as Total's leader, Christophe de Margerie felt he had a responsibility to participate in the public sphere. He is a reason why our industry now has a voice in discussions on energy, whose challenges and solutions are international in scale. But his engagement transcended energy. Like Christophe, I believe companies are concerned by broader social trends and can play a role, consistent with their size and influence, through their contribution to a vibrant local economy in their host regions, their social innovations and the codes of conduct they adopt and promote.
To continue building relationships of trust with our stakeholders, I think it is important to explain our challenges and their complexity, to make clear commitments and keep them and to be transparent about what we do. “Say what we do and do what we say” is the mindset I'd like to see Total cultivate.
"Safety and business performance go hand in hand."
Safety is the bedrock of our strategy. We intend to become a benchmark in our industry in this area, which means we must be even more disciplined.
We're making progress toward that end: we have cut our total recordable injury rate (TRIR) by 50% in four years. Our efforts focus on workplace safety and preventing major industrial accidents. We have standardized our management guidance in the company. We have strengthened our internal control and audit processes. We encourage systems to report problems and share best practices on the front lines. Our performance is also the result of working in partnership with our suppliers and service providers to meet the highest standards.
Fatal accidents don't have to happen in our businesses. We want everyone to “Go home safe!” By end-2015, all of our employees and contractor employees working at our sites will be using the stop card process. The goal is to encourage an individual commitment to following safety rules: everyone has the right and responsibility to stop a dangerous situation. No safety, no go! By making our activities ever safer and more reliable, we also improve our business performance
"Total can be responsive and adaptable in the face of industry ups and downs."
In early 2014 we launched a cost-cutting program to counter continual inflation in our industry. A year later, the situation had worsened, with the price of Brent sliding 50% in eight months. A drop of $10 per barrel represents a loss of earnings of $2 billion for us. So we had to respond immediately. Without giving an inch on safety, the set of measures we took will help lower our break-even point by $40 a barrel, a sustainable industrial response in a volatile environment.
Although we're adapting in the short term, our strategy of organic growth is unchanged. Our intensive investment program over the period 2012-2016 saw capital spending peak at $28 billion in 2013. We expect to reap the benefits by starting up our projects on time and on budget. We may be cutting our capital expenditure by 10% in 2015, but it will still total $23 billion to $24 billion.
"Long term, the challenges of growing energy needs and climate change shape our efforts to remake ourselves."
The energy landscape has changed profoundly in the last decade and knowing how to adapt is more vital than ever.
For the next 20 years, two major challenges must be addressed: the growing energy needs of a burgeoning global population and climate change.
I consider the link between human activities and climate risk an established fact. The debate must focus on solutions. And the solutions must be compatible with economic growth, especially in emerging economies, to avoid colliding head-on with legitimate aspirations. Some 1.3 billion of the world's people still lack access to power, and that doesn't include future economic and demographic growth. The International Energy Agency's baseline scenario projects that energy use in 2040 will be more than 35% higher than in 2012.
Although the share of renewable energies will grow, the global mix in 2040 will remain dependent on fossil fuels: 74%-dependent according to the baseline scenario and 59%-dependent based on the lowest-range fossil scenario. Developing new oil and gas resources remains vital to meeting that need. The decline in existing capacity in 2030 will equal almost half of today's production. That will require the oil and gas industry to invest significantly to develop new projects.
"Promoting natural gas is the priority to help out the climate. And yes to solar!"
In the space of a decade, our natural gas production has risen to the same level as our oil output — our first and main contribution so far to tackling the climate challenge. Natural gas is the lowest-carbon fossil fuel. To reap quick climate benefits, we consider it a priority to replace as much coal as possible with natural gas to fire power plants.
Solar is clearly a long-haul commitment for us. Past and upcoming strides in both technology and cost reductions allow experts to forecast profitable unsubsidized solar power. More than 17 countries already find themselves in that position. However, solar accounts for just 1% of the world's power production. Even if it posts very strong growth, expansion will take time.
We're also improving energy efficiency, at our facilities, in our processes and by developing eco-efficient products and services for our customers. Upstream, phasing out routine flaring of associated gas on older oil fields is one way we're doing that. We have already halved flaring from 2005 levels at our operated production sites (excluding initial start-ups) and are aiming for zero routine flaring by 2030.
Helping our customers also means finding innovative solutions for communities that lack access to modern energy. In 2011, we launched Awango by Total, a line of very affordable, high-quality solar lamps. Since then, a million lamps have been sold in 23 African and Asian countries, making daily life easier for five million people.
Lastly, our industry must commit more collectively. We feel it is especially vital to factor carbon prices into every investment decision. However, isolated efforts by companies won't be enough. To create a virtuous circle without stifling growth or distorting competition, governments and businesses must team up on a global, phased-in carbon pricing mechanism.
"Industry has to adapt to the energy transition in Europe."
Europe's efforts to make transportation more energy efficient are steadily driving down demand for petroleum products. Total is the continent's leading refiner and we have surplus capacity. Two of our five refineries in France are losing money. Europeans are more frugal, smarter consumers, so we have to adapt our production base in response.
We have shown in the last several years that we can adapt in a socially responsible way. On the other hand, radical, innovative changes need to be made to ensure an economically viable future for some facilities. This approach worked well at Carling. Steam cracker operations were losing more than €100 million a year. We reinvested €180 million in new, higher-value-added activities. Today, without the steam cracker, Carling is in the black.
"Innovation is the key to meeting all our challenges."
Our R&D spending has risen steadily in the last several years. We are allocating $7.4 billion to research and development between 2015 and 2019. The latest digital developments, including the widespread use of micro-sensors and mobile Web access, offer enormous opportunities. Innovation allows real-time monitoring of critical operations and predictive maintenance of equipment, boosting reliability and cutting costs. They have also paved the way for customized products and services for our customers, and even access to new customers, with business models that are becoming profitable thanks to online services. Not to mention the fact that digital technology will be a major driver of energy efficiency, including new ways to manage energy use, web-based services that also reduce the need for transportation, and websites that support car sharing on a large scale.
The next 20 years will definitely be a watershed for our industry. We will be a gas and oil company, actively participating in the development of renewable energies to provide the clean, safe and competitive energy the world needs to as many people