Financial Times in London
Total S.A., the French oil group, has warned politicians that they risk accelerating an oil supply crunch if they enact environmental policies that deter investment in oil and gas before enough viable alternatives are available.
“Governments need to assess the needs of this planet in terms of energy and stop saying we will develop solar and then not have enough,” Christophe de Margerie, Total’s chief executive, said in an interview with the Financial Times. “Carbon is not the enemy; carbon is life.”
Mr. de Margerie has a relatively moderate position on climate change among his peers. He wants governments to enact clear, far-reaching policies to reduce carbon emissions so the oil industry can make investment decisions.
“We as companies cannot take the risk. We are investing without knowing what the contractual framework on carbon will be,” he said.
Mr de Margerie is the most vocal of his peers in terms of insisting environmental policy needs to go hand in hand with energy security policy.
He warned policymakers heading to December’s climate change conference [United Nations Climate Change Conference 2009] in Denmark: “Don’t go to Copenhagen only with your concern about the environment. We also have a concern over energy access. If you take only one [concern with you], we are dead and we don’t want to die.”
At a conference this week he challenged other oil executives to disprove his theory that the world would never be able to produce more than 100m barrels of oil a day – 20 per cent more than today – because so many of the world’s remaining reserves lie in countries unwilling or unable to tap them.
He does not expect a breakthrough in Copenhagen and said that the industry to be hit hardest by any serious effort to reduce carbon emissions would probably be left with no road map by which to invest in technology and energy sources that were more favorable to the environment.
“All the parties involved are not ready to make a commitment,” he said. “I think people are not ready and will be very careful not to go to the point of rupture.”
Total is the largest investor in the North Sea. Mr. de Margerie said he had gained assurances that a new UK Conservative government would not try to plug the national budget deficit by levying additional taxes on companies exploring and developing fields in the North Sea.
Nevertheless, he said he was worried that the government could impose carbon emissions taxes on oil companies. “That will stop investment at a time when it is already very complicated in Europe,” he warned.
Total expects to become the UK’s second-biggest oil producer within the next three to four years, moving up from its current fourth position.
“We may need additional incentives to develop smaller, riskier fields in harsh environments,” Mr de Margerie said, adding that the UK needed to work to keep big oil companies active in the North Sea. He noted that the recent dramatic drop in drilling during the credit crunch was in large part due to smaller companies being unable to continue with their investments.
He warned that not only the planet would suffer if the UK and other governments failed to enact smart environmental policies. “I hope you have a lot of candles,” he said.