CERAWeek 2014 - Energy Dialogue: Vision for the Future - Session Report

IHS Vice Chairman Daniel Yergin opened Tuesday's Energy Dialogue lunch session by introducing Christophe de Margerie, Chairman and CEO of Total S.A. Dr. Yergin thanked Total S.A, for its support as a Strategic Partner of IHS CERAWeek and acknowledged in particular Yves-Louis Darricarrere, President of Upstream at Total S.A.

Mr. de Margerie began the discussion by noting that cost control is the main challenge for energy companies in 2014. While acknowledging the importance of safety and environmental concerns, he said that he sees battling increases in expenses as the primary goal. Mr. de Margerie talked about the need for oil and gas companies at every level, from subcontractors to large companies, to cooperate in fighting cost inflation as part of a long-term strategy for the industry, since competition is meant to bring down costs, not drive them up.

When asked whether adequate investment was being made in resources, Mr. de Margerie said that the size of the resource is less important than finding solutions to utilize the resource. Oil and gas will retain significant shares of the energy mix for years to come. The issue is not with peak oil or gas, he said, but rather with peak capacity owing to other issues such as the environment and political instability. Mr. de Margerie also remarked on the importance of renewables for the future. He discussed Total's recent investment in a solar company and said that the company is committed to cleaner and better energy. Total views this as a long-term investment, as Mr. de Margerie expects renewables to play a more significant role in the future.

Mr. de Margerie explained the US revival in manufacturing as a result of low energy prices from increased domestic hydrocarbon production. This boost in hydrocarbon production will lead to excess capacity, and international exports will gain importance. Europe's primary concern is not whether it can develop its own shale gas, but how it imports US gas and how the situation with Russia is addressed.

Regarding the recent developments between Ukraine and Russia, Mr. de Margerie noted that the language surrounding the situation was overheated and that the oil market response was relatively mild. On other international issues, Dr. Yergin asked Mr. de Margerie how he would advise the French president on the issue of hydraulic fracturing. He responded that he is not concerned with France's moratorium on hydraulic fracturing. He explained that Total has plenty of other opportunities for investments around the world and that France is inconsequential. On the question of Iran, Mr. de Margerie said that if Iran is kept out of the system, peace cannot be achieved in the Middle East. If the embargo against Iran is lifted, Total would enter into agreements with Iran, pending the terms of the agreement.

Mr. de Margerie concluded by thanking IHS for inviting him to IHS CERAWeek, which he said is important in bringing energy leaders together to share views and consider options. He also noted that cleaner energy has a bright future if it can control costs.

This article was published by S&P Global Commodity Insights and not by S&P Global Ratings, which is a separately managed division of S&P Global.