The CEO of the French major oil company Total, Christophe de Margerie, died in a tragic collision between his corporate jet and an oncoming snowplough at Moscow’s Vnukovo International Airport on 22 October. De Margerie was flying back to France after a meeting with Russian Prime Minister Dimitry Medvedev to discuss foreign investment in Russia. After the meeting, De Margerie boarded the doomed jet that was heading to France and both he and three crewmembers were tragically killed. The snowplough driver and some workers of the airport have been accused of “criminal negligence” and are under the close scrutiny of the Russian authorities. The incident coincides with a strategic review of the company, taking place this autumn and marking a highly decisive moment for Total.
Christophe de Margerie graduated from the Ecole Superieur de Commerce in Paris in 1974 and went on to become the Chief Executive of Europe’s third largest oil company in 2007. Total has diversified its activities and expanded internationally since the 1990s, therefore evolving into one of the leading companies in the oil sector next to North American oil giants Chevron and ExxonMobil. These achievements, and its excellent marketing campaign “Committed to Better Energy” can be attributed to Christophe De Margerie. The Total CEO was known as “The Big Moustache” among colleagues for his prominent facial hair, as well as for being one of the most charismatic and outspoken oil executives of his generation. Personalities from the political and business world attended De Margerie’s funeral to pay their respects, including France President François Hollande who applauded De Margerie’s contribution to the French energy industry: “Christophe de Margerie dedicated his life to French industry and to building up the Total group. He made it into one of the very top global companies.”
Immediately after the incident, Total’s Board of Directors hurriedly met to decide who would be the successor, aware of the implications of a potential fall in share prices. The Board of Directors has split De Margerie’s post between Thierry Desmarset, the former Chair Executive between 1995 and 2007, and Patrick Pouyanne, Head of Refining. The current governing executives will remain in their respective positions until 2016, when the two roles of Chief Executive and Chairman will once again be combined. Desmarset is a more than reasonable candidate for Total’s future, after transforming the oil company into a global force to be reckoned within its various subsidiaries on five different continents. Desmarset was instrumental in diversifying the energy sector and leading projects that involved high technological infrastructures. However, certain events – such as the 1999 Erika’s oil spill and the 2001 explosion of the AZF industry in Toulouse – have tarnished his reputation.
As CEO, Christophe De Margerie also adopted some unpopular policies concerning, for example, the Ukraine crisis. He referred to the economic sanctions from the European Union as “unfair and unproductive” which just led to “a deadlock”. The controversial CEO went on to remark, “Can we live in Europe without Russia’s gas? The answer is no, we can’t. Are there any causes for living without this gas? I think no, and not because I defend the interests of Total in Russia either.” In fact, the project for a joint venture with Russia’s Lukoil Company to look for ‘shale oil’ was stopped due to Western sanctions. Total is also one of the biggest foreign investors in Russia, therefore the Ukraine crisis has put a lot at stake for the French oil giant.
Total is currently facing various challenges; the intense competition between the major oil companies limits the access to petrol and gas resources. Dutch Shell and American Chevron, for example, are two of Total’s main competitors and also seek to expand in the Australian market.
Following De Margerie’s orders, Total recently embarked on fifteen projects. However, these ambitious projects were put to an end because of disappointing financial results in September. Profits have decreased by a hefty 20% compared to last year and are expected to continue their downward trend. The combination of refining problems in Europe and disappointing results in exploration have forced the company to reduce its investments and its costs, affecting all sectors. Nevertheless, as the Economic correspondent for the BBC, Andrew Walker, argues “The markets appear to think the company will cope”.
The death of Total’s CEO is not the only event that has recently affected oil. In fact, there has been a general drop in oil prices in part due to higher supply over demand; this undeniably affects oil companies and governments with regards to profit making. The threat of deflation and its impact on the economy shows exactly how dependent everyone is on oil and the problems major oil companies, such as Total, will encounter.