In Good Company with Nicolai Tangen - Patrick Pouyanné CEO of TotalEnergies

Episode Date: March 9, 2023

In this episode, Nicolai Tangen talks to Patrick Pouyanné Chairman and CEO at TotalEnergies, one of the largest energy companies in the world. Nicolai and Patrick discuss net zero, challenges and opportunities in the energy transition and Patrick share some fascinating insight of his past meetings with Vladimir Putin before the invasion.Unfortunately, we experienced some technical issues during the recording of this episode, which resulted in poor quality of sound. For those that find it hard to follow what is being said, please find a transcript of the entire episode her; Transcript The production team on this episode was PLAN-B’s Niklas Figenschau Johansen and Martin Oftedal. Background research was done by Sigurd Brekke with additional input from Ståle Lægreid.Links:Watch the episode on YouTube: Norges Bank Investment Management - YouTubeWant to learn more about the fund? The fund | Norges Bank Investment Management (nbim.no)Follow Nicolai Tangen on LinkedIn: Nicolai Tangen | LinkedInFollow NBIM on LinkedIn: Norges Bank Investment Management: Administrator for bedriftsside | LinkedInFollow NBIM on Instagram: Explore Norges Bank Investment Management on Instagram Hosted on Acast. See acast.com/privacy for more information.

Hi, everyone, and welcome to our podcast in good company. I'm Nikolaj Tangen, the CEO of the Norwegian Samoan Wealth Fund. In this podcast, I talk to the leaders of some of the largest companies we are invested in, so that you can learn what we own and meet these impressive leaders. Thank you. some sound issues with this episode, but we still want to release it because it was just like seriously interesting. So, well, first of all, Patrick, thank you very much for taking the time. Now you are the CEO of one of the largest energy companies in the world. Do you think we'll reach

net zero in 2050? Yes, we have to be optimistic. The challenge is huge, to be honest, because to reach net zero in 2050 yes we have to be optimistic the challenge is huge to be honest because to reach the zero we need to change the whole energy system of the planet and it's a huge and it's a promethean task we have to be to believe in the capacity of mankind to be creating innovation my answer is why not but we have to work out all together the world and not only in the developed world, but together in the emerging world, we want to succeed. And what's your take on the current energy crisis that we are currently seeing?

There are a lot of things, you know. The debate of the energy debate was dominated by sustainability. And now what we've been doing is we do, but, you know, energy policy has three pillars. One is, I would say, you need, but energy policies are three pillars. One is, I would say, you need a reliable energy, security of supply. You need an affordable energy, affordability. And you need a sustainable energy, sustainability. And I think what reveals this crisis is that we should not forget the three pillars.

And honestly, having spent 25 years in this industry, what struck me in 2022 is that the affordability part, even in off-country, non-developed countries, is dominating the debate. And that's, for me, the main challenge for the energy transition. Are we able to really make this change, this huge investment, changing the world energy system, keeping the affordability of energy? Because energy is a primary need. When you see the reactions in European countries, when you see an increase in gasoline prices or in nutrition prices, people don't accept that because it's just touching their primary needs and their purchasing power. So you can imagine that if affordability is key in developed countries, their level of life is quite good. What is it in emerging countries? Well, for them,

access to energy is just a fundamental element of their aspiration to a better way of life for any economic and social development. So that's for me. And so all this transition, and I know it's something contradictory because the scientists told us we absolutely need to survive globally speaking on the planet. We need to tackle this climate change, but this will have a cost. And the question is, how do

we make this just transition that everybody is calling for? But we will manage it only if we keep in mind that anywhere in the world the people want to have access to an affordable and reliable. Now, you are in a lucky situation this year in that you are having record profits. Do you understand why governments want to tax this windfall profitability? Yeah, I think it's, I mean, honestly, it's a very paradox from this year.

We are, the company has never been so in good health, I would say, in terms of balance sheet, in terms of results, profit. But it's true that we do it. And somewhere it's perceived by society at that expense. You know, in fact, the affordability challenge that I was just mentioning. You know, so you have a sort of political, societal debate around companies like Total Energy, where people say, okay, look, these companies, they are making billions of profits,

and at the same time, they have a problem to see the billions of profits and the increase of the gathering price of the firm. So that makes, it's a legitimate political debate. Does it go through taxation? Does it go through what we've done on the other side, which is more voluntary debates. We've gone to our customers, telling them

we will come to you and we'll try to share the burden with you. But I think I perfectly understand that the debate is coming on the table today, and that we have to face it. Again, we are in a field where energy is

a primary need, and so I'm perfectly conscious of, I would say, our responsibility towards our customers. Having said that, it's not true to say that we do not deserve it. We are today in this position because we have invested also and we are taking big risks. But it's clear that, I would say, the magnitude of the volatility of the price today in Europe is too high. To be honest, 400 euros per megawatt hour for power is too expensive.

And so that's part of what's why we are not against when the European Union has decided to put some special taxation, I would say, on the energy field, in particular to capture part of the infra margin for electricity, we will be taxed. We'll have to pay this tax, but I can understand the political logic of it. Well, as you know, we are great believers in ownership, and we believe companies like yours are a very important part of the energy transition. So the other large investors, and there are many of them, who actually divest from companies like yourselves, what is it that they are getting wrong?

Again, I think it's wrong because it's back to what I said today. A company like us, by the way, became Total Energy because we want to be one a new leader of this transition. But if I want to invest, like in 2023, $5 billion in renewables, which makes our company among the top five investors in this new renewable energy, I need to generate the cash. And the strong asset that we have is our balance sheet. We are generating a lot of cash. And the strong asset that we have is our balance sheet. We are generating

a lot of cash, and we generate it from hydrocarbons, and we reinvest part of it in these renewables. So we are exactly making this transition. So I think it's a company like us is able for investors at the same time to deliver some good dividends. We are a cash machine,

so we are attractive for investors, but we are also preparing the future dividends by investing in some low-carbon energies. When we talk to your competitors, they talk about you as being a very innovative company with very technologically advanced solutions and so on. Now, how have you developed that mindset in the group? how have you developed that mindset in the group? I think, you know, TotalEnergies became a major oil and gas company with no hydrocarbons in France, almost nothing. So we have been able, we are almost 100 years old,

we'll be in 2024, we have been obliged to be developed abroad. Which is quite extraordinary, right? Because you are the only large energy company with no natural resources. Exactly. And so we have developed a company abroad in the Middle East, in Africa. But by bringing to us countries, technology, project management, capacities, innovation. I strongly believe that, you know, what makes the future, for me, the future of a major company like ours is innovation. So innovating is key. like us is innovation industry so innovating is key and i'm always spending a lot of time every year for example with my executive committee just trying three four days to do what we would we call

a learning expeditions lastly lastly we went to israel during four days a group of 10 executives with us why because i want to show to my colleagues and question of leading by example, by spending four days of my time, myself, just to listen to innovators. And we went to, of course, to California, we went to China, we went to India. It's important in order to capture some new ideas and then to integrate them. So I think the spirit of innovation is key. It's part, I would say, of, again, we have built this company because we have been obliged to do it, having not benefited ourselves from, I think I would say, an easy oil resource or gas resource to capture. The International Energy Agency said last year that no new oil or gas field developments in new areas were needed.

What is your view on that comment? And at the same time, the same agencies are cleaning us every week or every month to invest more. So I think there is a contradiction there. And I think we spend a lot of time. Let me be clear. We agree with the IEA scenario to be endpoint in 2050. We have exactly the same image, how much we produce,

not much more than 25 million barrels per day by 2050, right? The IEA. The question is the trajectory. Should we begin to decline from today, or can we wait? If we decline from today, again, it's back to the previous debate, then the price of energy will go higher and higher and higher. It will not be a just

transition. So I think for me the scenario has been extreme, but at the same time, again, the IEA themselves, month after month, in 2021 and 2022, they asked to produce more. So less more investments, but we should stop investing in green fields. It does not work. People, that is…

So this is something for me which is just… That's why we disagree with the scenario. I know the scenario become like the Bible, which is a problem. When we speak today about climate change, it's becoming like a religion. You have the Bible, which is the AES scenario. I think we should, honestly, it's a very serious matter. We cannot just manage this transition by thinking that it could be done overnight with simple recipes. It's not true.

What is your view on nuclear? Nuclear, I think, for me, it's, I would say, of course, it's a decarbonized energy. So it should be part of the nuclear, for sure. But there was Fukushima, you know, and Fukushima, we were looking to nuclear

and take Fukushima. Fukushima raised for us a question, question mark about the risk. And I have a question mark for me. Is the nuclear risk compatible with the balance sheet of a listed company, a public company? I'm not fully convinced of it. Is the nuclear risk compatible with the balance sheet of a listed company, a public company?

I'm not fully convinced of it. So I know that there are some... Yeah, what do you think about the future breakthrough? I want to be sure that it's not just a startup who wants to make money, but we are really investing for the long term, because it's fashionable today. There are some new...

We have reached some new steps. We are far from being able to put that on an industrial scale. Patrick, if you change tack a bit and go back to 24th of February

last year, suddenly one of the countries where you had big investments invaded Ukraine. Anna, how did you personally cope with that situation?

Well, it's tough because it's true that our companies have spent quite a lot of time building quite a good position, a strong position in Russia. We are believing that economic bridges was a way to maintain peace with our own. We are part of this dynamic. We are big investors, in particular in the energy business in Russia. So it was, of course, for us something, I would say tough, but at the same time, Russia, and you know,

we have a policy in the company. We don't want one country to represent more than 10% of our capital in France. We were just at 10%. And I was asking myself the question before the war, okay, be careful. We are at the limit of what can be acceptable. And I think I knew that we could survive to that.

So it was more of a matter of them. And it was a complex discussion with the board and everybody because there was a lot of emotions, of course, on one side. And so emotion being clearly, this drama is just unacceptable. And at the same time, we are responsible of a company with some assets.

And so the question was, and we have also the mission, by the way, to continue to deliver to Europe some supply, energy supply. And so we engage into discussion with French governments and other governments to see

what should we do. So it was quite intense. We decided that we'll find a way to withdraw regularly, I mean, step by step, in the right order, but continuing. In fact, today, nine months after, I would say, or ten

months after, we are left only by one asset fundamentally, which is the asset which contributes to European security supply, which is the MLNG. All the other assets have been stepped up to spend diversity. It took you some time to exit Russia. Did Macron have to call you? No, no, I'm sorry, Macron did not have to call me. I was discussing right after February

24 with him, and we were very closely discussing. He didn't ask to ask me. He even asked me to continue to do my job, to supply the energy to Europe. You know, Europe did not sanction Russian gas since the beginning. We were total energy. We decided to stop

buying, purchasing any oil, Russian oil, at the end of March 2020-2021. We declared it before the sanctions were taken by December 15. On the gas, they didn't decide it. They even told me, and I would say Chancellor Schultz the same, let's continue to deliver to bring to Europe the gas that we need, because without this energy today, it would not be so easy. So again, and my position is very clear, I told them, if you ask me what to do, if you decide to stop

ocean gas, bringing ocean gas, we'll stop immediately. No problem. It's not a matter of total energy's assets. I will do exactly what you decide. But this is where policy makers need to take their position and we need also on our side to answer. Because of the big investment you had in Russia, you met with Putin many times, I think. How was he to deal with? I mean, I never negotiated to him. I met him from time to time,

but I don't negotiate with Putin. I was not doing that. No, but I think it was somebody who was first in the topics. He knew about it. I can tell you the last discussion I had, I was even impressed by the capacity of knowledge of European markets. I should have been more worried about it. So he knew perfectly what we were speaking about.

He had a very, I would say, nationalistic approach. I think more convinced by statehood companies than private players, to be honest, even if he was willing to attract some foreign investments up to a certain point. But again, I would say, again, all what I was thinking back by that time, what is happening today you can forget. You see who he is today. So I mean, I was probably wrong like others, but in fact he was clearly, he is clearly dominated by the idea that he must install, I would say, the power, the old Russia power, which is of course going beyond what all democratic values can accept.

I mean, again, I think we were part of the idea after 1991 that we could anchor Russia to Europe and to the Western world by building economic bridges, economic investments. We'd be part of the peace journey. Obviously, it was not his agenda. This is what we understand today. The fact that he knew the European gas infrastructure so well, why did that make you suspicious? Because I think that, honestly, I was impressed that he understood

very well the dynamics of the European markets and that the influence that could have the Russian gas on the European supply. I think he was very aware of that dependency of Europe on the Russian gas. I think he probably has more understanding than some of the Western European leaders who have discovered it with the war. It was part, I think, of the discovery of 2022 for many leaders. But they did not realize that, in fact, with Russian gas, even, look, we had a lack of infrastructure, of energy infrastructure.

We had a lack of gas capacities with Russian gas. So today, we are in Western Europe, in Germany, but everywhere we are trying to build quickly some gas capacities in order to substitute to the Russian gas. So that's part. That means that, in fact, in terms of security of supply, Europe not really makes a stress test what happens if Russian gas is no more available. So today, in a hurry, but it will take us two, three years, we are building the infrastructure

we need in order to substitute the Russian gas by energy. Of course, energy is more expensive than the Russian gas. It's probably why we are missing it. So I think he had this understanding, but maybe more understanding of this knowledge about it. And he was, I think he has used it properly. Now you deal increasingly with the different state leaders. What do you think is the most important diplomatic skill

you need to have in that situation? Well, you know, I think whatever, maybe it's my own character, I think you have to speak up, you have to say the truth. When you met them, what they expect from you is from time to time to tell them what you think is good for them and what you can bring them and what is not good for them. So sometimes you make, and I think it's part of my job, by the way, which is an interesting part, is to try to gain trust from some leaders in front of us.

So I have the chance to have access to some of them because for us, our company is just, have the chance to have access to some of them because for us, our company is just, in fact, we are developing, producing their natural resource in a large way. So we are an important stakeholder. But when I met them, I think what they expect from me is more to face the reality and to tell them what works well and what does not work well and how we put together to do better for their country. So honesty and I would say speaking up is our core. Good qualities in terms of influence here.

You are known for having a strong personality and you have to take this in the best possible sense. But does that make it difficult for people to work with you and to disagree with you? Oh, you know, I will tell you, that's true for any leader. When you become the number one in an organization, your life is changing. Because you think you are normal, but the people who are in front of you think you are not normal exactly. You are not the same, you know. And that takes time to understand that you are not so normal, you know. And that when they enter into my office, when I was entering into this office, by the way, with my predecessor, myself, I was more prudent you know and I say okay can I

say that or not you know and so you must encourage people to say you I mean and it's true. So are you are you so are you normal? I am I think I am but I'm not in their eyes you know uh so which is more important you know and they think. What does it do what does it do with your self-perception uh when your colleagues don't think you are normal? I think it's a matter of again, trying to find, to maintain the trust between us, but it's important, you know, I think in any organization

like that, you have a sort of isolation number one. The number one is very different. I discovered that when I became number one. Honestly, it's a fundamental differential, because suddenly everybody is looking to you as if you have all the answers to everything, which you don't have, obviously. But so

it's very different. And in fact, it requires from you a permanent attention to the people. Everybody wants to spend my days in meetings. They want me to listen to each of them. It's important. So you need to dedicate the time.

They are expecting from me some answers which sometimes I have, sometimes I don't have. And so it's part of finding the way. And I think what I'm trying to do is to demonstrate to them that collective intelligence is more important by my own personal intelligence. The dialogue, speaking together. I like business reviews. I. I like business reviews.

I don't like business reviews. I start meetings in the company where we exchange views. This is a part of the business where I'm happy. When it's coming to executive committee where I have to take the decision at the end, it's less fun

because then you are there to say yes or no. So I think it's part of being able to contribute to building collectively the position, the decision, So I think it's part of being able to contribute to building collectively and the position, the decision is something that we need to encourage people. So speaking up again, encourage them is important. So you're very clearly, you know, very accomplished professional.

You say you hated amateurs. Does that give you any challenges in your private life? It's a good question. You should ask my children and my wife. I think sometimes they think that I'm too... I make a difference, to be honest. I have my private life with my family, which I'm protecting, and they have my private life with my family, which I'm protected, and I have my professional life.

And I think, and by the way, it's not so easy sometimes, but I know when I became CEO, suddenly I became in France the CEO of a very large company. So I became my, for my children, it was not an easy situation, because suddenly their father was somebody they see the face of the father on the front page of the of the moon you know it was a change of life so you have also to protect that part and i think it's important to keep a secret garden when you are senior of a company you have your you have the company business you have a public uh face and uh that's what i'm facing at the same time you have your own secret garden keeping a certain stability i would say uh you you know, I like when I'm after Fridays

to spend some time to time on weekends. Some of them are in the Middle East, but when I can have some time where I'm more quiet at home, it's also very important. It's your own psychological stability. By the way, I'm both. How do you deal with personal setbacks? That's a good question.

I think you have to face again. I think it's very important to recognize them. And not to believe that, okay, you know, each mistake, because I learned something from my predecessor. He told me, okay, you know, you will make some mistakes. You will have some setbacks.

But you need to be enough lucid in order to avoid to do them again. You cannot do twice. So you will have some setbacks. But you need to be enough to avoid to do them again. You cannot do it twice. So you will make mistakes and you have to accept it. Try not to make too many. But if you take once, be able to recognize it and not to repeat it.

And I think I'm trying fundamentally to apply to my service. Then, when you have setbacks, you need to be able to discuss with my service. Then, when you are sent back, you need to be able to discuss with somebody else, not to keep them for yourself. Because if you keep for yourself the pressure, you think that you have too much pressure.

So it's very important to have some kind of power, which might be in the company, which might be outside of the company. In fact, people we would be able, I would say, your dissatisfaction or your, and that's important in order to manage your pressure. Who do you discuss with? I have some two or three persons with whom I will not, which are, people, not all of them, but which are, two of them are outside of the company

whom I discuss. And I regularly have a monthly meeting with one of them on which I'm sharing not only the success but the more the difficulties that I'm facing in order for him

outside of the company to react to what I'm doing and just being an outsider helped me a lot because it gives me some, I would say, some distance with what I'm facing

and trying to oblige me to ask questions. And that is very important to keep everything for you. Very interesting. Now, we have a lot of students and young people listening to these podcasts who would love to be as successful as you've been.

What would you advise them to do? Work hard. Work, work hard. Of course, you have to work on something where you have a pleasure. Pleasure is very important. When you do something, it's important to do it with pleasure. Because if you have some pleasure to work on something where you have a pleasure. Pleasure is very important. When you do something, it's important to do it with pleasure.

Because if you have some pleasure to work in what you do, then you will work harder and you will be successful. So I think it's important. I will also advise them to be careful with your boss. Now, I try to convince my children not to choose because they want to do one specific area of work. But what is important in your own life of others, in fact, you are some examples. You know, your boss will give you some leading by example. It's important that yourself, you are step by step learning from who you work with.

And so it's very important to, and I think I've been lucky in my life, my professional life, to have a succession of, on both, both which were helping me to grow, in fact, you know, and to become what I became because you learn from that

and you take the good, you take sometimes the bad, but you take the good, so it's important. So I try to be careful, and also it's important to to choose who you work with. Now, you are also a big foreign actor in Norway. What do you think about the Norwegian continental shelf?

In Europe, it's fundamental. There is a huge resource base. It's a huge resource base. And, you know, we have kept all our assets. I am a strong believer of keeping my assets in Norway. I didn't make any spin-off or any... I think it's important we have a strong position with Equinor,

by the way, which we admire. Norwegian Confidential Shelf is not an easy place for a foreign company to have a strong nationalism in Norway, but we have a good service industry as well. It's a position that we have developed since the 70s, I would say,

and which we continue to develop. We are happy to join the UN. There are six of discoveries to be done. So it's not, I think it's one of the most prolific areas and where again, of course, fiscal terms in Norway are tough, but at the end of the day, it's a long history. You have visited here many times. What is your best personal experience? In Norway? I think it's I would say my best personal experience

in Norway. I think that's a good question. How can I answer to that? No, I think people in Norway, I think for me, are kind people. They are in a good discussion. And last time I went to your, I think it's a direct discussion and I like it. I mean, my personal experience is to go to Arctic Circle, to go north, you know, to go to Tromso and beyond. Because I love to see the Boreal Nights.

I don't know if you call that in English, but Boreal Nights. So I think Boreal Nights is nice. So this is my best personal experience. You know, I'm just coming back from the Antarctic continent. I spent my 10 days of holidays and Christmas to go to Ushuaia and then to Antarctica to cruise. So I like this type of landscape with plenty of ice. It's good because you can relax and think. There is nothing except some penguins and whales.

It's another way to think. And I think when you are a CEO, it's also good from time to time to exit from your world, which is going very fast, where you have to come and take decisions and I like this type of landscape which you can find in Norway where we have snow and ice and this is a way to do that.

Wonderful. Well, I think this is a really lovely and peaceful place to end. A very big thanks for taking the time. It's been tremendous having you on and all the best

with the energy transition going forward. Thank you very much for the invitation.