Integrated energy companies such as Total need not become "dinosaurs" in the transition from fossil fuels and will adapt to slowing oil demand, investing in natural gas, LNG, electricity and renewables alongside low-cost oil, CEO Patrick Pouyanne said Tuesday.
The specter of climate change loomed large as Pouyanne spoke at the Oil & Money conference in London on the pitfalls of dismissing the oil and gas industry as angry protesters gathered outside the event.
"The pressure on oil and gas companies is increasingly growing, and growing at a pace I would not have anticipated one year ago, [but] we can have a clear view of the challenges and of the solutions," he said. "If we don't want to become dinosaurs, we'll have to adapt. I think we have every chance, all oil and gas companies, to be winners of this energy transition."
Pouyanne noted Total's plans to double its LNG production by 2025, to 800,000 b/d of oil equivalent, and to supply a quarter of global LNG output, making the French company the world's No. 2 producer.
In electricity, Pouyanne highlighted the company's plans to double the number of its electricity customers to 8 million by 2025.
Total will have 10 GW of power capacity in Europe, including 3 GW from natural gas and 7 GW from renewables, and outside Europe will install 25 GW of renewable power capacity, he said, insisting: "We can make profits from electricity."
Total's business under Pouyanne has seen a major pivot towards natural gas and LNG, which he said has a "brilliant future" because of it "being abundant, huge and flexible."
But the focus has to be on driving down the production costs of these commodities, he said.
ENERGY TRANSITION CHALLENGES
Oil would continue to be needed, Pouyanne said, with low-cost Middle Eastern oil likely to have the greatest longevity, as demand slows.
"There will be somewhere between today and 2040/2050 a demand plateauing and even maybe decline, which means we'll continue to produce oil, but we'll produce efficient oil, low-cost oil, the good oil of the Middle East," he said.
Pouyanne admitted the narrative around climate change was changing the oil and gas sector, but said it was not a pragmatic solution to rid of all fossil fuels by 2040 as oil and gas companies need to continue to "deliver cheap reliable energy.
"People see us as fossil fuels and say that everything should disappear," he said. "But not all fossil fuels are equal."
Pouyanne called for more opposition towards growing coal investment and deforestation rather than targeting the fossil fuel industry.
There has been growing pressure put on by climate campaigners on energy companies, pushing them to respond to the changing political environment, in which public concern over the threat of climate change could spell trouble for the industry.
"[There is] no way to make such a huge energy transition without huge investments, he said, adding that part of the problem is that "people don't want to pay for it.
