The new head of French energy major Total challenged Europe to fight Washington over the U.S. oil export ban, in his first public appearance since his predecessor Christophe de Margerie was killed in a Moscow plane crash last week. Patrick Pouyanne said on Thursday the export ban flouts free-trade agreements and puts European and Asian refiners at a disadvantage, making a bold appeal to European politicians.
“We need to fight and put this topic on the table,” Pouyanne said during a sometimes emotional appearance at London’s annual Oil & Money conference, where de Margerie had been a popular speaker over the years. “I hope the European Commission raises this issue … the refiners in Europe and Asia are suffering from one rule. That is the U.S. cannot export oil.”
Painted by some as a quieter figure to lead Total by comparison with de Margerie – who was known as ‘The Big Moustache’ for his charisma, risk-taking, and elaborate facial hair – former refining head Pouyanne said he would keep the company on the course set by his predecessor.
But his pointed comments on U.S. policy, made during a near-45 minute long question and answer session that was met with a rare standing ovation, suggested he has inherited some of his flamboyant mentor’s talent for controversy.De Margerie was an outspoken critic of U.S. and European sanctions against countries like Russia and Iran, arguing business relations forge deeper ties between countries and increase understanding. He was also not afraid of making bold statements at odds with many in the often conservative industry, saying oil production would peak and struggle to keep up with rising demand back in 2008 as prices raced to a record high near $150 a barrel.
A minute of silence was held for de Margerie on Wednesday during the traditional black-tie Oil & Money dinner and award ceremony. The organisers placed a glass of Lagavulin whiskey, de Margerie’s favourite, next to an empty seat where the Frenchmen sat last year. Pouyanne said he agreed with de Margerie’s stance on opposing sanctions against Russia.
“My priority is to continue … as if he were still alive,” he told reporters in French after the session.
US OIL BAN
The U.S. government is not expected to relax the crude oil export ban in the near future, despite a shale oil revolution that has put the country on course to become the world’s largest producer for the first time in decades.
“We are not negotiating crude oil exports with any countries at this moment,” Cathy Novelli, Under Secretary for Economic Growth, Energy and the Environment told reporters at a trade conference in Washington. The Commerce Department notified two companies earlier this year they could export minimally processed light oil, which many U.S. refiners are not particularly well suited to processing. But since the summer the department has put a hold on similar applications from more than 20 companies.
Since early 2011 U.S. crude oil has fallen to a large discount to international benchmark North Sea Brent, as bottlenecks of oil have formed in the Midwest of the country.
The lower U.S. oil price has benefited many refiners in the country, while plants in Europe and Asia have struggled with overcapacity, weak demand and low margins. Some plants have closed or sought government help, including some of Total’s. While the United States bans the export of crude oil – a legacy of the Arab oil embargoes in the 1970s – it does allow the export of refined products like gasoline and diesel, adding to pressure on plants in other regions.
Before his death de Margerie had been looking at a possible big merger or acquisition, the first under his leadership of the company that was created by a merger of TotalFina and Elf in 1999. Pouyanne did not comment on any merger plans during the session, but said Total was best placed of the oil majors to weather the near 25 percent drop in oil prices since June, with a number of projects coming onstream in the next 24 months.
He said he would continue plans to reduce operating costs and capital expenditure to return more cash to shareholders, but said it was important to keep investing in future production.
Comparing the firm to a large oil tanker that cannot change direction quickly, Pouyanne said the firm would always think long term, and sought to reassure shareholders they were in safe hands after the turmoil of the past nine days.
“The big tanker is strong and solid,” he said.