History is suddenly accelerating before our eyes. The COVID-19 pandemic has shaken the world so deeply and so quickly that it risks leaving us in a veritable state of shock. And yet in the face of such a challenge, all of us are called upon to react swiftly and sensibly, to tap into the values and resources that define who we are — individually and collectively.
Facing this kind of crisis, the CEO of a global company requires clarity of thought, a steady hand and, above all, communication with colleagues around the world who expect the captain to set the course. It’s a commitment to forging an urgent response to the short-term challenges, while never losing your vision for how to shape the future.
For an energy leader like Total, this moment comes with its own particular set of factors — and I believe that we are indeed facing three distinct and yet interconnected crises. There is of course the ongoing health crisis, which is the first instance ever of a deadly virus spreading around the world in a matter of weeks, and the ensuing mobilization of all available health resources. The pandemic quickly slammed the brakes on worldwide economic growth. The abrupt economic shutdown, on top of the decision of certain oil-producing countries to increase supply in early March, helped feed our second crisis: the collapse of oil prices. And of course, climate change, the third of these challenges, with the highest stakes for our planet that should not be forgotten in the face of the immediate emergencies. For this very reason, Total has just shared its new Climate ambition for 2050 — which I will come back to shortly.
At the top of all our minds is the threat of COVID-19. It has been important for us to offer direct action of solidarity for healthcare workers and extend our support to our clients in the countries where Total operates.
Safety is a fundamental value at Total. Our first priority is ensuring the health and safety of all our employees, suppliers and customers by providing high hygiene standards to all. This, of course, means respecting and enforcing government health guidelines, while reinforcing and expanding our system of safety procedures wherever necessary. Over the past few weeks, we have learned to work differently, and will continue to adapt as the situation unfolds.
As an energy company, our responsibilities during COVID-19 also extend to our customers, and society at large. Our operations are more vital than ever to provide the power required to produce and deliver food and medicine and keep hospitals and emergency services running. The reliability of our services stands at the heart of our mission, and I want to salute the thousands of Total employees around the world who are working on-site or remotely to be sure the energy keeps flowing.
In such a situation, we must stay the course and look after the well-being of the company itself. That is being challenged directly with the sudden drop in the price of oil, down by two-thirds since January, as the dispute between oil-producing countries only exacerbated the impact of the COVID-19 crisis on demand, and led to the sudden drop in prices. In practical terms, this means that the industry is overproducing while demand has crashed more than 20% — and with oil supplies going higher and higher... Still, we have seen such extreme price fluctuations before, and the market also plays its part: sending a price signal that halts output from the most expensive producers. All of that contributes, very gradually, to rebalance the market.
Total has proven time and again its resilience as a company. The group boasts a strong enough balance sheet to weather these disruptions; and more importantly, at $5 per barrel, Total’s production costs are the lowest among the majors. Regardless, we have implemented an action plan, with immediate effect, that introduces cost-saving measures targeting both our investments and our operations. And now again, we have prepared our business to withstand sways in the oil price, and even longer-term structural adjustments to the energy market.
The eventual resolution of the shorter-term health and financial crises will not make the existing challenge of climate change go away. Even today, with our attention drawn to the COVID-19 crisis, we should not forget that the singular calling of our generation is to achieve a sustainable future for the planet. In this spirit, Total has just shared its ambition to get to net-zero emissions by 2050, together with society, for its global business across its production and energy products used by its customers (scope 1+2+3).
We aim at maintaining our low-carbon investments, and are working every day to shift our activity toward solutions at scale. And our efforts are already paying off: The carbon intensity of our products has dropped by 6% since 2015, a record in our industry. Since January 2020, we have announced 6 GW worth of renewable projects — the equivalent of 4 EPR nuclear reactors — to which we can add our very recent entry into the Spanish energy market, through 2.5 million residential customers, 2 GW worth of solar projects and 0.8 GW gas power plants.
Despite today’s particular context, Total intends to stay true to its vision: to keep evolving to become a multi-energy Group and achieve our ambition to get to net zero by 2050. To make it a reality, I have utter confidence that our teams will be able to deliver energy that is safer, more affordable, cleaner and accessible to as many people as possible.
In the meantime: Be well, stay safe.
Patrick Pouyanné, chairman and CEO of Total