Interview with Patrick Pouyanné,Chairman and CEO, Total
Prism / 2 / 2017

Interview

80/81

Digitalization can make energy
more affordable
How the fourth-largest international oil and gas
major is approaching digital innovation
An interview with Patrick Pouyanné, Chairman and CEO, Total

Patrick Pouyanné has been chief executive officer of Total since2014, after the death of his predecessor, Christophe de Margerie,in Moscow. A year after, he became chairman of the board ofdirectors. During his career at Total, he has held several important
executive positions in the Upstream segment, both in France andinternationally; he also successfully managed the transformationof the Refining & Chemicals segment. In this interview with ArthurD. Little, Patrick Pouyanné examines the upheavals and challenges
faced by energy companies, and how Total is embracing digital
innovation as a way to drive sustainable and profitable growth.

Interview with Patrick
the Chairman
Pouyanné,
Prism / 2 / 2017
Chairmanand CEO, Total
Prism / 2 / 2017

80/83
82/83

Many observers have been pointing out the key
energy challenges of the coming decades, such as
rising energy demand and efforts to limit climatechange. How does Total see these challenges?
Total, and energy companies more broadly, are facing adual challenge. First, the world population is growing.
It is forecast to rise from 7 billion today to 9 billion overthe next few decades. Today, 1.5 billion people still do
not have access to energy. It is fair to say that we mustdo everything we can to ensure that all these people
do have access to energy, a prerequisite for economic
development, in 30 or 40 years’ time. And second,fighting climate change is a pressing issue. There is abroad consensus on the objective of limiting the global
temperature rise to 2°C, and we fully endorse this aim inour business strategy. At first sight, these two challenges
might seem impossible to reconcile. But, in fact, we aim
to tackle them both, by being the responsible energy
major and providing the world with affordable, reliable,clean energy.
How is Total planning to align with the 2°C roadmap?
The roadmap underpins our strategy and is based on
several cornerstones. The first is giving priority to naturalgas. We see it as the fossil fuel of the future.It is thefossil fuel that generates the lowest emissions, typically
only half as much coal when used for power generation,for example. Our portfolio is gradually shifting froma 50/50 split between oil and gas to a 60/40 split infavor of gas. Gas is also flexible and an ideal partner for
renewable energy, which is intermittent, and will remain
so until the industry finds a workable solution to store
the energy produced by renewables. Promoting gas isa must, which is why, for instance, Total advocatescarbon pricing.

“We will still be an
oil and gas major
in 35 years’ time.”

Does that mean that you still seea long-term role for oil and gas?
Definitely! Have a look at theInternational Energy Agency’s scenario
limiting climate change to 2°C. It
anticipates that the energy mix will
become less carbon-intensive, but
oil and gas will continue to play animportant role, accounting for morethan 40% of the mix, compared to 60%
today. This directly impacts Total: wewill still be an oil and gas major in 35years’ time. Without oil and gas, risingenergy demand cannot be met. But as
oil consumption will diminish, the mostexpensive oil will not be produced;
therefore, it is important to focus on
producing the “low breakeven” oil –in other words, the competitive oil.
Strengthening the competitiveness ofthe oil we produce is what we havedone, for example, by pairing Total’s andMaersk Oil’s businesses in the North
Sea: we have driven down our breakeven
to lower than 30 dollars per barrel, andcreated the North Sea’s second operator.
But there are other cornerstones, as
you said, to reach your objective of
being aligned with the 2°C roadmap.
You have diversified into renewables,for instance.
I like to see renewables as part of abroader category in our portfolio, which
I call “low carbon.” It includes the gas
downstream, renewables, typically solar
energy, biofuels and energy efficiency.
Total has been a pioneer in the lowcarbon sector. Acquiring SunPower in2011 and becoming a major player in“Our ambition is to grow
our low-carbon portfolio
to 20% of our business in20 years’ time.”
solar are part of the same movement
as acquiring Lampiris, a green gas andpower distributor, and Saft, a high-grade
battery maker – as are teaming up withEren RE, which develops solar, hydroand wind power projects, and investingin CCUS technology. It is aligned with
our ambition of growing our low-carbon
portfolio to 20% of our business in 20years’ time. Total is anticipating thechanges in the energy mix, which wewelcome as an opportunity to grow. But
we only invest where we see a businesscase, and with exactly the same capitaldiscipline as for the rest of our assets.
We aim for profitable growth.
So buying Maersk Oil, the Danish oiland gas champion, and partneringwith Eren RE, a renewables company,
are part of the same strategy?
Absolutely. To invest in low-carbon
businesses - some of which are not yet
mature in terms of profitability - you needto make money. At Total, our strategy
is to fund our diversification ventures
through our core business, oil and gas.
Diversification only works if you havea solid core business that generatesa profit. By acquiring Maersk Oil, we
capitalize on our strength, which, inturn, allows us to step up our efforts
in renewable energy with Eren, forexample. For the same reason,

Interview with Patrick Pouyanné,
Chairman and CEO, Total
Prism / 2 / 2017

84/85

“In my opinion, the energy company of thefuture should focus on delivering the energy theworld needs through a diversified, balanced,
profitable portfolio of assets.”
I strongly believe that Total must remain
integrated along the oil and gas value
chain, including the downstream. That’s
how I see the energy company of thefuture: focused on delivering the energy
the world needs through a diversified,balanced, profitable portfolio of assets.
How has Total approached thechanging nature of innovation, forexample, the increasing importance ofecosystem development and working
with partners, and the need for evergreater speed and agility?

Innovation is the engine that drives thedevelopment of a company and creates
its value added in the long term. It is
critical for a company like ours to beinnovative. Total’s history goes backalmost a century, and the fact that weare still here is testament to our ability
to develop new concepts and reinvent
ourselves. But in an open world, inevolving markets, you can never reston your laurels. Encouraging a cultureof innovation is key to our success.
The company now has a culture andan organization that foster innovation,

starting with a new Strategy & Innovation
Division at the corporate level, which
includes R&D and a digital team led bya chief digital officer. But innovation is
not just about products. It is also about
the right frame of mind, having an open
attitude towards the new challenges
that come our way, new work methods
and more. This is why I think innovation
involves everyone, and everyone is apotential innovator.

How does Total work with start-ups?
We have various interactions with startups. Through Total Energy Ventures,
our corporate venture fund, we acquire
minority interests in those we find themost promising. We gain access to theirideas, agility and creativity, and in return,they have access to our commercial
and financial clout. Another example
of our open innovation methodology isKey facts and figures
•
•
•
••

4th largest international oil company based on market capitalization$149.7 billion in revenue in 2016$8.3 billion adjusted net income in 2016
2.45 million barrels of oil equivalent produced per day in 2016
98,000 employees in 130 countries86/87

About Total
Total is a global integrated energy
producer and provider, a leadinginternational oil and gas company,
and a major player in low-carbon
energies. Its 98,000 employees arecommitted to better energy thatis safer, cleaner, more efficient,more innovative and accessible toas many people as possible. As
a responsible corporate citizen,
it focuses on ensuring that it’soperations in more than 130
countries worldwide consistently
deliver economic, social andenvironmental benefits.

our “Plant 4.0 project”: every year, weinvite start-ups to join this incubatorand demonstrate their concepts andhow they might apply to what we do.
I strongly believe that a company like
Total needs to be challenged and tokeep an open mind about innovation andtechnology. We cannot come up with all
the answers ourselves.
How does Total approach digital
innovation in particular?
I like to joke that you can’t digitize oilor gas. They are hard commodities.
But what we see happening is that a
lot of services related to this businesscan be digitalized. For instance, we arelaunching a gas and power distribution
service in France that will be available
through an online platform. It’s easy,

because customers now expect this typeof service to be easy. Being digital-based,
the service will be very competitive. It’sa great example of how digitalization
can make energy more affordable. In
the solar business, we are seeing more
and more customers being drawn to
distributed systems, where a solar panelon their roof is paired with intelligent
software, helping them manage theirconsumption. Digitalization is spreading
as our customers are getting morefamiliar with it. They are starting toexpect us to be able to deliver in digitalform. So it is really a topic that we aretaking seriously. I don’t see it as a threat;
I see it as a field offering opportunities.

How does Total see AI, and how
does it intend to leverage this newcapability and support innovation?
Artificial intelligence is a tool, a means toan end. At Total, we need to acquire andprocess all kinds of data – from seismic
acquisition, or about our customers or
the way our plants operate. Processing
data is slow and complex, even for Total,
which has the industry’s most powerfulcomputer, Pangea. So I believe artificialintelligence, big data management,machine learning, etc., have a role to playthere. They are productivity enhancers,that’s for sure. Machines can replicate,accelerate processes. But at Total, acompany of scientists and engineers
through and through, we will always
need the creativity and insight of thehuman mind.

“Artificial intelligence, big data management
and machine learning will play a major role
as productivity enhancers.”
Vincent Bamberger
is the Managing Partner in the Paris andBrussels offices of Arthur D. Little.

About Patrick Pouyanné
Chairman and CEO of Total
A graduate of École Polytechnique and a
Chief Engineer of France’s Corps des Mines,
Patrick Pouyanné held various positions inministerial offices from 1989 to 1996, includingEnvironment Technical Advisor to the Prime
Minister (1993–1995) and Chief of Staff to theInformation Technology Minister (1995–1996).
He joined Total in 1997 in Angola, then in Qatarin 1999. In 2002, he was named SVP Finance, Economics and Information Systems
Exploration & Production. In 2006, he became SVP Strategy, Business Developmentand R&D in Exploration & Production. In 2012, he was appointed President, Refining& Chemicals and a member of the Group’s Executive Committee. In 2014, Patrick
Pouyanné was appointed Chief Executive Officer of Total, and a year after, Chairmanof the Board of Directors.

88/89