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    Total Goes 'Back to the Future' with Gas & Power



The French major is going “back to the future” by creating a Gas, Renewables and Power segment to take effect from September.

by: Mark Smedley

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Total Goes 'Back to the Future' with Gas & Power

It’s “back to the future” at Total which is creating a new Gas, Renewables and Power segment under a revamped corporate organisation to take effect from September 1, 2016.

This marks a shift away from the business model pursued since the 2010s by Royal Dutch Shell, BP and Total itself where gas has been bundled under ‘Upstream’. Shell's erstwhile Gas & Power chief Linda Cook was once seen as a future group CEO until her division was subsumed in 2009.

Now Total – which today has just three segments – Upstream, Marketing & Services, and Refining & Chemicals – will revert to a model prevailing a decade ago when European majors used to invest directly in gas-fired power.

In a statement released late April 19, it said that its new segment “will spearhead Total’s ambitions in the electricity value chain by expanding in gas midstream and downstream, renewable energies and energy efficiency” and be run by a member of its executive committee – not yet named.

“We intend to deploy a proactive strategy in gas markets to meet demand and identify new outlets for our production. We will also produce and sell power from renewable sources. Electricity will be the energy of the 21st century and the growth of gas and renewables is pushing us to take a value chain approach to electricity,” said Patrick Pouyanne, Total’s chairman and CEO.

It echoes Eni CEO Claudio Descalzi’s speech to the IEA last week in which he urged more investment in renewables and gas particularly in Africa, and said that Eni itself would practice what it preaches. In Nigeria for instance, Shell and Eni – but not Total – each own gas-fired power plants.

Eni has senior midstream and downstream executives handling Gas & Power, who report directly to the CEO, a change introduced since Descalzi took over the top job in mid-2014. Before then under former CEO Paolo Scaroni, Eni’s business model more closely resembled Total’s three-pillared one.

Total has though kept a strong focus on solar R&D and on biofuels. But Pouyanne now wants more: “We have multiple ambitions in renewables in 20 years’ time: be in the top three in solar power, expand in electricity trading and energy storage, be a leader in biofuels, especially biojet fuel, and consider potential development opportunities in other renewable energies.”

Total on April 19 also said it will create a new ‘Total Global Services Segment’ that will pool accounts, IT and HR worldwide, and said that its Holding would beef up a ‘Strategy & Innovation’ division and that this would ensure the 2°C global warming scenario is hardwired into Total’s strategy.


Mark Smedley