Role Profile: TotalFinaElf
Thierry Desmarest – Committee Chairman, and CEO
Thierry Desmarest was born in 1945. He is a graduate of Ecole Polytechnique and of Ecole des Mines, two elite schools in France. He began his career in the oil industry in 1971 as head of the Mining directorate in New Caledonia, before serving as a technical advisor at the Ministry of Industry (1975-78) then at the Ministry of Economic Affairs (1978-1980). He joined Total in 1981 as Managing Director of Total Algeria. He held various positions within Total Exploration Production, ultimately becoming its President in July 1989 and a member of the Group's Executive Committee that same year. He became President of the Upstream segment in January 1995, and Chairman and Chief Executive Officer of Total in June 1995. Following the merger with Belgian PetroFina in June 1999, Thierry Desmarest became Chairman and Chief Executive Officer of newly created Totalfina. On February 2000, as a result of the European Commission's approval for the controversial acquisition of larger competitor Elf Aquitaine for 44 million, the Board of Directors of Elf Aquitaine named Thierry Desmarest, Chairman and Chief Executive Officer of Elf Aquitaine. Since March 2000, Thierry Desmarest is Chairman and Chief Executive Officer of the new TotalFinaElf group. Known within the company as “le petite prince”, Desmarest is a crucial reason for TotalFinaElf’s success.
The grand scope of operations and diverse holdings around the world of TotalFinaElf lies in its remarkable history. Total was founded in 1924 as the Compagnie Française des Pétroles, or CFP. Originally a producer of crude, the company expanded into refinement, and distribution of crude, as well as into petroleum gas, and chemicals. Fina was formed in 1920 as the Compagnie Financière Belge des Pétroles, or PetroFina. Originally created to extract and refine petroleum products in Romania, Fina expanded in these operations, as well as delving into plastics, paints, lubricants, and jetfuel, ultimately to concentrate on refinement in the volatile 70’s. El Aquitaine, or Elf was founded in 1939 after a major gas field was discovered in the Aquitaine region of France. Elf would later enter all aspects of petroleum, from well to pump, and later entered chemicals and plastics, as well as health products such as perfumes, and cosmetics. Traditionally, the government of France intervened and oversaw the activities of their companies. France owned a majority interest in Total, and 35% of Elf. French government then had great influence over the choosing of the companies CEOs, in addition to being able to fix prices, and limit production the way that only a country can. In the early 1990’s, France liquidated most of its holdings in the companies, allowing more corporate freedom, although ministers were still involved in the affairs of Elf until the late 90’s, when corruption and scandal were revealed in El Aquitaine. Contrary to what one might expect, the absence of government influence in industry after France diluted the majority of its interest in both Total and Elf, led to energy consolidation under Desmarest. A united front led to less internal waste, and less competition abroad, enabling France to secure vast and diverse reserves, and a network of chemical and petroleum refinement around the world.
TotalFinaElf is currently divided into three sectors: upstream, downstream, and chemicals. Upstream includes oil and gas exploration and production. Downstream covers refining, petrochemicals, plastics, polymers, and specialty chemicals. TotalFinaElf is managed by the Executive Committee (COMEX) and the Management Committee (CODIR). The COMEX is TotalFinaElf's primary decision-making body in matters of overall strategy and has investment authority. It also prepares decisions for submission to TotalFinaElf's Board of Directors. The CODIR facilitates coordination among the various Group units, monitors the results of the operational divisions, and reviews the reports of the functional divisions. It includes all Executive Committee members as well as 22 senior managers from the various functional and operational divisions.
TotalFinaElf is currently the 4th largest energy group in the world, the no.1 distributor and refiner in Europe, the no.1 producer in Africa, and the no.2 producer in the Middle East, operating in 120 countries around the world. Since Desmarest took the reigns in 95’, stocks reached some 300% in 2001 compared to 1995, sales have soared, and net income for the group has tripled. France also became the first western oil group in the world to deal, in writing, with Iran. Recent exploration has entered into exploration sites in Gulf of Mexico (Chinook, Klondike, Cascade, and Aconcagua wells), Bolivia (San Alberto), Nigeria (OPL 256), the Congo (MTPS), Angola (Block 17, Jasmine-1), Azerbaijan (Shah Denize), Kazakhstan (Kashagan), and Norway (4 offshore wells), allowing the Paris-based company to have well above-average production despite having almost no internal production whatsoever. Current production hovers around 1,433 Kbeo/d in liquid production, and 3,758 Mcf/d in gas production.
TotalFinaElf focuses on diversification of upstream, downstream, and chemicals particularly due to its weak internal production. To ensure that its relatively high consumption of 2 million barrels of oil a day (1.9 million of which is imported) are not compromised, geographically and nationally diverse reserves are necessary to inoculate any natural or political disaster that could affect the reserves. Since French Algeria began producing oil, Africa has been a chief concern, and will continue to be such. French has historically been involved in Middle Eastern affairs, and will continue to do so, and South America, and offshore rigs will constitute the remaining aims of exploration policy. TotalFinaElf also has interest in securing a foothold in the Mediterranean basin and the Far East, recently flourishing markets which would mutually benefit from TotalFinaElf’s investment.