Transcript of In Good Company: Patrick Poyanné CEO of TotalEnergies

Nicolai Tangen [00:00:01] Hi everyone, and welcome to a podcast in Good Company. I'm Nicolai Tangen, the CEO of the Norwegian Sovereign 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. Today I'm talking to the CEO and chairman of Total Energies, Patrick Pouyanné. Total Energy is one of the largest multi energy companies in the world. They have more than 100,000 employees and are active in more than 130 countries. We own over 3% of the company translating into 38 billion kroner or more than 4 billion U.S. dollars. So tune in. Unfortunately, we had some sound issues with the 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? 

Patrick Pouyanné [00:01:02] Yes. We have to be optimistic. The challenge is huge, to be honest, because to reach net zero, we need to change the world, the energy system of the planet. And it's a huge and it's formidable task. But we have to believe that if we're going to be creating innovation. My answer is why not? But we have to work hard all together around the world, and not only in the developed world, but the going to be the emerging world want to succeed. 

Nicolai Tangen [00:01:28] And what's your take on the current energy crisis? And current is in. 

Patrick Pouyanné [00:01:32] A is a lot of things, you know, that energy debate was dominated by sustainable sustainability. And now what we are seeing, you know, the energy policy of the last one is I would say you need reliable energy, more energy security of supply. You need an affordable energy, and you need a sustainable system. And I think what it is, this crisis that we should look for good policy, I think having spent 25 years in this industry. What struck me in 2022 is that the affordability part, even in countries, not developed countries, is dominating the debate. And that's for me, the main challenge for the energy transition, if we are able to really make this huge investment, changing the world energy system, keeping the affordability of energy. Because energy is a primary need, you know, and when you see the reactions in European countries, when you see an increase in gasoline prices rise, people don't accept that because it is effective their primary needs and their purchasing power. So you can imagine, if affordability is key in developed countries, the level of life is quite good. What is it emerging countries now for better access to energy, It's just a fundamental element of their aspirations for a better way of life, of energy consumption. So that's for me. And so all of this transition and I know it's something that particularly because the scientist told us we absolutely need to survive globally, speaking of the planet, we need to tackle climate change. But this will have a cost. And the question is, how do we make this just transition that everybody is calling forth. But we will managing only these if we keep in mind that anywhere in the world that people want to have access to affordable and reliable. 

Nicolai Tangen [00:03:27] Now, you are in a in a lucky situation this year in that you are having record profits. Do you do you understand why governments want to tax this windfall profitability? 

Patrick Pouyanné [00:03:37] Yeah, I think it's I mean, honestly, you know, we are it's a very paradox for me this year, you know we are the company has never been so strong I would say of the balance sheet in terms of business profits. But it's true but we do it and somewhere it's perceived by society to that extends, and we try to tackle the affordability challenge. But as I were just mentioning. You know, so you have this sort of political social debate around companies like Total Energies that are making billions of profits. And at the same time, they have a part of the billions of profit, that's gathering pace of the problem. So that makes it a legitimate political debate. Does it go through taxation? Does it go through what we've done on the side? Well, we're through the debates. We've got the customer, will we have to share the burden with you, I think. But I think I perfectly understand that the debate that's coming on the table and that we have to face it and we cannot again, we are in the field where our energy is a primary need. And so we are perfectly conscious of the, we say, our| responsibility towards our customers. Having said that, it's not true say that we do not deserve it. You know, we asked the question because they have invested also and taken big risk, and I think that is clear. But I would say the magnitude of volatility of the price in Europe is too high. From the European we go with our portfolio is too expensive. And so but that's why we are not against Europe in the EU is trying some special taxation, I would say on the energy field in particular to cut through the past year from a margin for electricity, we will be tough, will be we like to pay these taxes, but I can’t understand the political logic. 

Nicolai Tangen [00:05:34] Well, as you know, as you know, we are great believers in ownership and we believe you are. Companies like yours are a very important part of the energy transition. So the large investors and there are many of them who actually divest from companies like yourselves. What is it that they are getting wrong? 

Patrick Pouyanné [00:05:50] I think it is wrong because it's back to what they said today. If a company like us, we Total Energies we want to be one of the leaders of this transition. I want to invest 19, 20, $25 billion in renewables, which makes our company among the top five investment investors in this new renewable company. And I need to generate cash. And the strongest asset that we have is our balance sheet. You know we are generating a lot of cash and we generated for hydrocarbons within the first part of it it is renewable. 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. So we are attractive for investors, but we are also preparing for the to future dividend by investing in some low carbon energies. 

Nicolai Tangen [00:06:46] 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? 

Patrick Pouyanné [00:06:58] I think, you know, Total Energies, became a major oil and gas company with no hydrocarbons in France, almost none, And so we have been able to do this almost 100 years old, we will be that in 2024. We have been obliged to be developed to grow. 

Nicolai Tangen [00:07:14] Which is quite extraordinary. Right, Because you are the only large energy company with no natural resources. 

Patrick Pouyanné [00:07:19] Exactly. And so we have developed a company abroad in the Middle East and Africa. But by bringing to the country technology, project management, capacity, innovation, I strongly believe that, you know, what makes the future for me is the future of a major company 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, for four days to do what we call the learning expeditions. Last year we spent four days together. Why? Because I want to show my colleagues and questions of leading by example by spending four days of my time myself just released with innovators you know and we went we were of course to California we went to China went to India is important in order to capture some new ideas and then to integrate that. So I think the spirit of innovation is key. I would say about again, we have built this company because we we have been obliged to do it, having not been benefiting ousted from, I think I would say a and an easy and always you that move to capture. 

Nicolai Tangen [00:08:29] 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? 

Patrick Pouyanné [00:08:38] And then at the same time, the agency explaining to us we have to invest more. Well, I think that is a contradiction. And I think that we spend a lot of time, let me be clear, we spend a lot of time on the scenarios to be at the end point in 2050. We are on the exactly the same image of how much we produce, 25 million barrels of oil per day in a year. But 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 be then the previous debate since the price energy would go up. And I think it will not be a just transition. So I think for me the scenario has been extreme. But at the same time, again, the idea themselves month after month in 21, they asked to produce more. So let's more investments, but we should stop investing in the deep-water based. So this is something for me, which is just that's why we disagree with this scenario. I know this scenario has become viral, which is a problem, though. When we speak to some about climate change, is has become a religion. You have the Bible, which is the IAE scenario, I think we should honestly, it's a very serious matter. We cannot just manage this transition by thinking. But we be overnight. We've seen poor decision. It's not true. 

Nicolai Tangen [00:09:57] What is your view on nuclear? 

Patrick Pouyanné [00:09:58] Nuclear, I think for me, it's an I would say, of course, it's a decarbonizing energy so it should be part of the mix for sure. But there was Fukushima and Fukushima. We were looking at nuclear before Fukushima. Fukushima raised for us a question mark of risk and I have and is nuclear power risk compatible with the balance sheet of a listed company, public company. I'm not fully convinced or so I know, but there are some. 

Nicolai Tangen [00:10:24] Yeah. What do you think? What do you think about the fusion breakthrough? 

Patrick Pouyanné [00:10:26] I want to be sure. But it's not just a startup, we want to make money, but we are really investing for the long term because there is a lot of especially today but there are some today. Yeah, it's a new step. We are far from being able to put is at a large scale.

Nicolai Tangen [00:10:42] If we 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. And how did you personally cope with those situations? 

Patrick Pouyanné [00:10:55] That's not because it's true. But the company that I'm building a good position in Russia and we are believing that it could have been building bridges that was a way to maintain peace. We are part of the dynamic we have. We are invested in this particular 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 to a policy in the company. We don't want one country to be more than 10% of our capital inflow. We were almost just 10 percent. And I was asking myself the question before the war be careful, we are at the limits of what can be acceptable, and I knew that we could survive that. So it was matter then and 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 is just an acceptable. And at the same time, we are responsible of a company with some assets. And it was a question what was. And we have also the mission, by the way, to continue to deliver to Europe and some supply the energy supply. And so we engage in discussion with European, French governments and other governments to see what we should to do. So it was quite intense. We decided with will find a way, withdraw regularly even step by step in the right order, but continuing, in fact today, nine months after I would say ten months after we are left only by one asset fundamentally, which is the asset which contributes to European security of supply, all the other assets have been taken out, step by step. 

Nicolai Tangen [00:12:44] You took it took you some time to to exit Russia. Did did Macron have to call? 

Patrick Pouyanné [00:12:51] I'm sorry Macron did not have to call, you know what I was discussing right after February 24 with him, we were very close discussing, you ask me when asked me to continue to be my job, to supply the energy to Europe. You know, Europe are not sanctioned Russian gas since the beginning. Total Energies decided to stop buying any Russian oil in end of March 2021, we declared it before the sanctions that where taken by December 5^th on the gas they did not decided and they even told me and I would see a chance to go for the same let's continue to be able to bring to Europe together because without these energy to do so. So again, and my position is very clear, I told them, if you ask me what to do, if you decide to stop pushing down, bringing Russian gas would stop, would be no problem. So it's not a matter of TotalEnergies assets. I would do exactly what you decide. So policy makers need to take their position and we on our side need to answer it. 

Nicolai Tangen [00:13:55] Because of them, the big investment you had in Russia, you met with Putin many times, I think. Now, how was how was he to deal with? 

Patrick Pouyanné [00:14:04] I mean, I never negotiated with him. I met him from time to time. But they don't negotiate with him. I was not doing that. No, but I think he was somebody who was first knew the topic, he knew about this, in the last discussion I had I was even impressed about his knowledge of European markets, I should have been more maybe worried about this he knew perfectly well what we were speaking about. He had a very nationalistic approach; I think more convinced by state companies. I mean, privately, even if he was willing to attract some foreign investment for a certain point. But again, I would say again of what I was thinking. But I don't know what is happening today. You can forget we used to do so. I mean, I was probably wrong like all of us. But the fact was that he was dominated by the idea of installing Russian power, which is, of course, going beyond what our 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 economy bridges, economy investments would be part of the peace deal made. Honestly it was not in the agenda today

Nicolai Tangen [00:15:37] The fact that he knew the European gas infrastructure so well. Why did that make you suspicious?

Patrick Pouyanné [00:15:43] Well, because I think that. I was impressed that he new the dynamics of the European markets and that. Yeah. The dependence Europe had on the Russian supply of gas. And I was very aware of that dependency throughout Europe on the Russian gas and I think he had some more understand than some in the western world. I think it was part of the discovery in 2022, that we did not realize that in fact on Russian gas you know we had a lack of infrastructure, of energy infrastructure. We had the lack of gas capacity, but Russian gas, so today in Western Europe and Germany, but everywhere we are trying to build quickly some of this capacity to substitute for Russian gas, but in fact at a gap of security of supply. Europe did not stress what if Russian gas is not available. So there in in the early years, it would take us two three years to build the infrastructure we need to substitute for Russian gas by LNG, you know of course LNG is more expensive than Russian gas is probably why we are missing it so it's I think yes. Is understanding about the maybe a bit more understanding of the knowledge about. And he was I think yes. He was using it properly and hmm. 

Nicolai Tangen [00:17:14] Now you deal increasingly with the different state leaders. So what do you think is the most important diplomatic skill you need to have in that situation? 

Patrick Pouyanné [00:17:21] Well, you know, I think what the there is my own character. I think you have to speak the truth. When you meet them, they expect from you sometime tell them what you think is good for them and what you what you can bring them and what is not good for them. Know. So sometimes you make and I think it's part of my job to us in this to to gain trust from somebody. So I have the chance to have access to some of them because for us of company is just to, you know, we are developing, producing, you know, there are natural resource in a large way we are an important stakeholder. But when I when I met them, I think what they expect from me is to face reality and what works well. And we could together do for the better. So honesty and I would say that speaking up is a good quality here. 

Nicolai Tangen [00:18:21] 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? 

Patrick Pouyanné [00:18:30] You know, I would tell you that’s true for every leader, when you become number one in an organization, your life is changing because you think you are normal. But the people in front of you don’t think you are normal. And that can take time to understand this. You are not so normal. And when they enter into my office, when I wasn't in this office btw, with myself I was more prudent, can I say that or not, okay, can I see about or not, you know, And so you must encourage people to say what they mean and it's true. 

Nicolai Tangen [00:19:01] So are you are you so are you normal? 

Patrick Pouyanné [00:19:03] I think I am. But I’m not in their eyes you know, and I think that important to know, what they think. 

Nicolai Tangen [00:19:09] What is it what is it do with your self-perception when your colleagues don't think you are normal? 

Patrick Pouyanné [00:19:14] 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 in the organization like that you have a sort of isolation number one that the number one is very different. I discovered that when I became number one, honestly, it's a fundamentally different job because suddenly everybody is looking to you as if you have all the answer to everything which we don’t have obviously. But so it's a very different and then in fact, it requires from you a permanent attention to the people know what everybody wants. They want me to listen to each of them is important. So you need to dedicate the time they are expecting for me some answers. Sometimes I have. Sometimes I don't have. And so and so it's part of finding the way. And I think what they're trying to do is to demonstrate to them that collective intelligence is more important than personal. The dialogue, speaking together. I like business meetings. I don't like to have meetings where we don’t exchange views. You know, this is the part of the business why I think when it's coming to executive committee where I have to take the decision at the end, and then you are there to say yes or no. So I think it's part of being able to contribute in building collectively and the positions and decisions is something we need to encourage people. So speaking up again is important. 

Nicolai Tangen [00:20:47] So you are very clearly, you know, very accomplished professional. You say you hate amateurs. Does that give you any challenges in your private life? 

Patrick Pouyanné [00:20:56] It's a good question. You should ask my children and my wife. I think sometimes the times they do, they think that. 

Nicolai Tangen [00:21:04] That's going to. 

Patrick Pouyanné [00:21:05] Make a difference. To be honest, that I'm not. I have I have my private life with my family, which I'm protective and then I have my professional life. And I think and by the way, it's not so easy sometimes that I know when I became CEO. You know, in France, the CEO of a very large company. So I became my for my children not very easy situation because their father was somebody saw the face of the father on the front page of Le Mond. It was the change of life. So you have also to put things up. And I think it's important to keep a secret garden. When you are CEO of a company, you have your company business, you have a public face, and that's what I'm facing. At the same time, you have your own secret garden, I would say. You know, I like when after Friday to spend from time to time my weekends, some are in the middle east. But when they can have some fun is also very important. It's your own psychological stability. 

Nicolai Tangen [00:22:11] How do you deal with personal setbacks? 

Patrick Pouyanné [00:22:14] That's a good question. I think you have to face. I think it's very important to recognize it and not to believe, because I learned something from my predecessor, you will make some mistakes. You will have some setbacks. But you need to be resilient enough to not do them again. If you cannot do twice, you will make mistakes and you have to accept it. Don't try to make too many. But if you take once, be able to recognize it. I'm not to repeat it. I think I'm trying fundamentally to try to myself this motto, When you have setbacks you need to be able to discuss with somebody else because if you keep for yourself the pressure, you think that you have too much pressure. So it's very important to have some support, which might be outside of the company. But people are we would express, I would say, your dissatisfaction on your. And that's important in order to manage your profession. 

Nicolai Tangen [00:23:21] Who do? Who do you discuss with? 

Patrick Pouyanné [00:23:22] I have with some two or three persons with whom I would not, which are with people, number of them, but which are two of them are outside of of the company. I think I do a monthly meeting with one of them which I'm sharing not only the success which is more difficult for you outside of the company to react to what I'm doing and just being an outsider's has helped me a lot, Because it has given me some distance with what I'm facing in trying to oblige me to ask questions. And that's it's very important to keep everything. 

Nicolai Tangen [00:23:59] 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 this? 

Patrick Pouyanné [00:24:08] Well, work hard. You have to work somewhere you have a flavor. You know, when you do something, it's important to me because if you are, it's a pleasure to work in what you do, then you will work harder with other and you will be successful. So I think it's important. I would also advise them to be careful to choose your boss. No. 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, some example your boss would give you some leading by example is important to yourself. You are step by step learning from work with. And so it's very important to and I think I've been lucky my I life. So the succession of on both which were helping me to go to know and to and to become what I became because you learn from them and you things are good things and the bad and you take the things that are good. So it's important. So I try to be careful, so important to choose who you work for. 

Nicolai Tangen [00:25:16] Now, you are also a big foreign actor in Norway. What do you think about the Norwegian continental shelf. 

Patrick Pouyanné [00:25:20] In Europe its fundamental. It’s a huge resource space. We have kept all you assets. I am a strong believer of keeping my assets in Norway. I did not want to make any spin off, I think it's important. We have a strong position with Equinor. Norwegian continental shelf is not an easy place for foreigners. A strong nationalism. Service industry is also very well. So it's a position that we developed since on which we continue to develop. So it's not I think it's one of the most prolific and rare, again, of course, in sport. You know, we are also. But at the end of the day, it's a it's a long history. 

Nicolai Tangen [00:26:18] You have visited here many times. What is your best personal experience? 

Patrick Pouyanné [00:26:22] Norway? I think people in Norway are kind people. Last time I went through Stavanger you know, I think it's a historic discussion and I like that. And I I've had personal experiences to see Tromso and beyond. 

Nicolai Tangen [00:26:55] The northern light. 

Patrick Pouyanné [00:26:55] The norther light is nice, I just coming back from the Antarctic continent, I spend my days of this Christmas to go to school. I don't do tactically because I like to recycle for landscapes with plenty of ice. It's good because it's you can you can relax and think there's nothing except some nature. And overall and well, it's a move away. And I think you relax from the world, which is going very fast. We a decision and I like this type of landscapes which you can find in Norway. You have the snow and ice 

Nicolai Tangen [00:27:43] The wonderful what 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. 

Patrick Pouyanné [00:27:54] Thank you very much for your invitation.