This is the fifth article in a seven-part series examining the changing dynamics of the oil and energy industry: Introduction | BP | Exxon | Chevron | Shell | Total | Statoil
France's Total may not be a bona fide member of the "Seven Sisters," but operating in more than 130 countries, it is certainly global. And with annual revenues higher than the GDP of Hungary, it is certainly a supermajor.
Total was one of several supermajors shaped out of a "friendly merger," this time between Elf Aquitane and TotalFina (itself the result of an earlier merger) in 1999. This was a bid by the French government to bolster "national champions," to help them survive in a tough global economy — and, more importantly, to avoid a non-French company swooping in instead.
Despite the setback of losing its larger-than-life boss to a plane crash in 2014, Total's astute cost-cutting appears to be paying off.
The French connection
As a French major amid a crowd of Anglo-American competitors, Total has gained something of a reputation for bucking the trend as something of a "renegade." It has cultivated close links with controversial leaders in Russia, Burma, Venezuela and the Middle East.
However, Total's gung-ho approach has landed it in hot water more than once — most notably with a $398 million charge in 2013 from the FCPA for bribing Iranian officials. The company has also been investigated and fined for its involvement with Saddam Hussein's oil-for-food program in the 1990s.
We might even detect a streak of anti-Americanism in Total's rhetoric. In 2014, the company called for a greater role for the euro in the global oil trade, adding that "there is no reason to pay for oil in dollars," and management has hinted at prioritization of the Europe-Russia relationship over the Europe-U.S. relationship.
The signing of a joint letter with other European majors calling for governments to agree on carbon pricing at the Paris climate summit also was reportedly interpreted as creating a schism with American competitors.
Big shoes to fill
The biggest news to hit Total in recent years was the sudden death of its flamboyant CEO Christophe de Margerie in a Moscow plane crash in 2014, when his private jet collided with an allegedly drunk snowplow driver.
De Margerie, quickly recognizable by his infamous whiskers — he was known among employees simply as "The Big Mustache" — was a regular fixture on the international circuit. Politically shrewd, he was praised for his ability to navigate in challenging regions such as the Middle East and Russia and oversaw the largest expansion of Total's global reserves in the company's history after securing the top job in 2007.
He described his proliferous international deal-making as a product of Europe's own scarcity in energy resources, in contrast to the U.S. But his "high risk, high reward" strategy has been criticized for its lack of tangible successes, including its stake in Russia's complex Arctic Shtokman field and in the Gulf of Mexico.
De Margerie left big shoes to fill for his successor Patrick Pouyanne, who was quickly named as his replacement. Pouyanne was left to deal with the fallout of plummeting global oil prices and international sanctions on Russia, where Total is heavily involved in the Yamal LNG project.
Pouyanne apparently too enjoys a nickname — "The Bulldozer" — and has also proved a forceful presence, albeit delivered with less bombast. He has shown a cool head, arguing that the major should "react, but not overreact" to price volatility.
His history as a political advisor to the French government in the past make him a good candidate for picking up De Margerie's contact book, and for smoothing over politically any cutbacks and job losses domestically, in the face of opposition from France's strong unions.
Foreign affairs
As if falling oil prices were not enough of a challenge, Total is one of the majors more heavily exposed to Russia.
In an attempt to circumvent Western sanctions against Russia, Total recently turned east and signed loan agreements with China worth more than $12 billion. Total's partner in the venture, Novatek, is majority owned by Gennady Timchenko, a close ally of President Vladimir Putin, who has been under sanctions since 2014. The deal may have saved the project.
Being French, Total is likely to have one of the first shots at the Iranian market as it opens up to the West. In January, the company signed an agreement to buy 150,000-200,000 barrels of Iranian oil.
Total was one of the last companies to — begrudgingly — leave Iran in 2010 as sanctions made operations impossible. But Total never closed its office, paving the way nicely for an early re-entry. The company will be the envy of the likes of Exxon and BP, which are eager to get a piece of the fresh market but are more hampered by lingering restrictions.
Steady finances
Despite a troubled international portfolio, Total is by all accounts weathering the storm better than some of its rivals.
Pouyanne came with a reputation as a ruthless cost-cutter, shaped during his stint as head of the less "sexy" refining sector at Total (in contrast to De Margerie's E&P background) and by the pragmatism encouraged by such a post. In September 2014, management unveiled a cost-cutting plan that appears to be paying off, allowing Total to retain impressive proftability levels given an overall 40 percent decline in earnings.
Specific cuts include to oil sands developments in Canada — put on the "long back burner" — and the sale of $905 million of assets in the British North Sea.
At the same time, Pouyanne has pledged to boost spending on renewables in a bid to "become part of the solution to climate change." The move, while small as a proportion of investments, was likely made to appease shareholder concerns.
Total has strived to distinguish itself from the U.S.-centric Seven Sisters, making friends in oil-rich parts of the world where U.S. majors have to overcome a higher wall of cynicism. But Total remains a global player, and Pouyanne's agressive cost-cutting strategy is so far staving off problems as deep as those of fellow European major BP.
