Main sponsor of our Annual in Toulouse in June is TotalEnergies which last year celebrated 100 years in business, a period in which the oil industry and its role in society have witnessed a roller coaster of fluctuating fortunes and public sentiment.
Main sponsor of our Annual in Toulouse in June is TotalEnergies which last year celebrated 100 years in business, a period in which the oil industry and its role in society have witnessed a roller coaster of fluctuating fortunes and public sentiment. The company’s current challenge in a world plunged into economic turmoil is how to navigate through the uncertain world of energy transition.
The history of the company’s origins dates back to France’s experience during the First World War and French Prime Minister Georges Clemenceau’s understanding of the strategic importance of access to sources of oil. France in 1917 came within three months of running out of oil before the US answered its call for help.
Daniel Yergin notes in The Prize that before the war Clemenceau allegedly commented, ‘When I want some oil, I’ll find it at my grocer’s’. By the time Britain, France and the US were dividing the spoils of victory in 1918, a converted Clemenceau was clashing with Britain’s prime minister over a share of oil in Mesopotamia, essentially today’s Iraq, at that time controlled by the Turkish Petroleum Company (TPC), a British dominated consortium led by Shell. The San Reo Agreement in 1920 awarded France 25% of the oil in Mesopotamia (which was to become a British mandate under the League of Nations). Britain allocated to the French the share in TPC previously held by the German Deutsch Bank. It had sequestered the stake in 1915 with the promise of handing it over to France at the end of the war.
It was left to Clemenceau’s successor Raymond Poincaré to invite Ernest Mercier, already active restructuring France’s electrical power generating industry, to form Compagnie française des pétroles (CFP), a private sector company in which the state would initially be a 25% stakeholder (a percentage which has changed over time).
In the run up to the Second World World period, CFP was heavily dependent on Middle East oil beginning with supplies from the 1927 first major Baba Gurghur discovery in Iraq. TPC soon became the Iraq Petroleum Company (IPC) with the introduction of five American companies and signing of the so-called Red Line Agreement (1928) governing the exploitation of oil and gas resources in the prescribed area, based on the former Ottoman Empire, a deal that persisted for 20 years. In France, CFP under Mercier then won a major political struggle to set up refining capacity run by Compagnie française de raffinage (CFR) at Gonfreville in Normandy and La Mède, near Marseille, to receive Middle East crude and remain a private enterprise (although the government did increase its share to 35%, not to be diluted until decades late).
These developments had not quite been the intention in the original 1923 mission outline statement from Poincaré. He commissioned CFP to get involved in ‘any enterprise active in whatsoever oil producing region’ and ‘co-operate, with the support of the Government, in . . . exploiting such oil wealth as may be discovered in France, her colonies and her protectorates.’ Significant expansion would only come after the Second World War.
In fact during the war CFP was fortunate to retain its investments in IPC which were vulnerable once France came under German occupation and the Vichy administration.
Post-war, CFP embarked on a significant expansion. It faced growing local competition from newly created French energy organisations as a result of intervention by President Charles de Gaulle. This culminated in the development of what was to become Elf Aquitaine, a rival integrated energy conglomerate on a global scale, that ended in a merger in 2000.
The dramas experienced by these two companies in the history of France’s energy industry, including numerous corporate changes, are hard to encompass here. In its website history from the 1950s up to the end of the 20th century as it built into a major international integrated oil company, TotalEnergies points to some highlights in its evolution that it obviously views as significant. These include the 1956 discovery of major hydrocarbon deposits in the Algerian Sahara including the construction of the world’s first natural gas liquefaction plant, an ongoing business for the company ever since (the history of the complications of partners and Algerian independence are not discussed); the 1969 entry into the offshore Indonesia through acquisition of two licences held by Japanese company Japex; acquisition with Enterprise de recherches et d’activités pétrolières (ERAP) of an interest in Antar, specialist in lubricants and motor oils with refineries and over 5000 service stations; partner in 1971 discovery of Ekofisk gas field in North Sea; taking control in 1974 of Hutchinson rubber processing company; and the 1982 world record drilling of a deepwater well to a depth of 1714 m, 100 km off the Rhone delta, forerunner of today’s deep offshore drilling.
In 1999 Total followed the trend of industry consolidations by merging with Belgian company Petrofina, and the following year in a hotly contested takeover battle acquired Elf Aquitaine. With more than 132,000 employees, a turnover of €114 billion, and production of 2.1 million barrels per day, TotalFinaElf (soon shortened to Total) became the world’s fourth-largest hydrocarbon producer. With 17,500 service stations worldwide and a refining capacity of 2.6 million b/d, it also became Europe’s number one downstream operator. And the new group was the world’s fifth-largest producer of chemicals. Fortuitously, Elf Aquitaine four years earlier in 1996 had discovered the massive Girassol oil reserves in Block 17 offshore Angola to be followed by a succession of other finds.
How Elf (now a TotalEnergies brand of oils, notably visible in motor racing) got to be such a major player was down to the forming in 1939 of the agencies Régie Autonome des Pétroles (RAP), Société Nationale des Pétroles d’Aquitaine (SNPA), and Bureau de Recherches de Pétroles (BRP) in various roles initially to exploit the Saint Marcet gas field and later near Lacq in south-west France. RAP and SNPA expanded into French dependencies including Algeria after some famous disappointments), Congo and Gabon.
These all eventually morphed in 1976 into Elf Aquitaine (now with petrochemical, plastics and pharmaceutical interests) in which the French government had a majority stake until the mid-1990s. The latter years of the company were marked by a controversial acquisition spending spree and tainted by the Great Oil Sniffer Hoax losing $150 million in 1979 and a later huge corporate corruption and kickbacks scandal involving more than $400 million in illegal payments.
In the intervening years since 2000 TotalEnergies has climbed into the top ranks of the majors. Adjusted net income in 2024 was $18.3 billion with cashflow of $29.9 billion achieved with nearly a 15% return on average capital employed in 2024, the best among the majors for the third consecutive year. Having ridden the 2008 financial crisis, the 2013/14 oil price shock and the Covid pandemic, it has had to deal with unfounded accusations that its assets (with unrealisable dividends) have been used to fuel Russian war planes in Ukraine hostilities. Then there is President Trump’s unsettling administration including an anti-wind power stance in the US causing the company to pause projects off the US East Coast.
In a recent highly quotable interview in McKinsey Quarterly Patrick Pouyanné describes walking a tightrope by committing to a shift of a fifth of its business to renewable-led intergrated power by 2030 stating this is considered ‘not enough oil and gas’ for traditional investors and not ‘enough renewables’ for green stakeholders.
The French company claim to a leadership role in energy transition rests on its record to date, superior annual spending on energy transiton of $5 billion and the ambition of its 2030 objectives.
In the past, Total has made key moves like acquiring Saft Groupe, the world leader in the design and production of high-tech batteries for industry; taking a 60% stake in Sunpower, America’s second-largest manufacturer of solar panels; and acquiring Direct Energie, France’s third-largest supplier of green gas and electricity. Among recent initiatives, the company agreed a 300 MW renewable energy agreement in Oman, is collaborating with Air Liquid to decarbonise its refineries in Northern Europe with green hydrogen, and with its partners launched the second phase of the Northern Lights CCS project in Norway. It also closed its acquisitions of VSB Group, a European wind and solar developer with extensive operations in Germany, and SN Power, which develops hydropower in Africa, particularly Uganda.
The big picture is that TotalEnergies plans on 100 TWh of electricity generation by 2030 with significantly increased renewable production, especially solar and wind, and will expand its flexible assets including CCTG and storage. Other tragets are 1.5 Mt of sustainable aviation fuel by 2030, 40% net reduction in Scope 1+2 emissions in 2030 (already -26% in 2024 and -36% in oil and gas), and 25% lifecycle carbon intensity reduction of energy products sold (-16.5% in 2024 vs 2015). The full story can be found in the company’s extremely comprehensive 2025 Sustainablity and Climate 2025 Progress Report.
For 2025 the company foresees a net investment budget of between $17 billion and $17.5 billion. However, the portion allocated to low-carbon energy is being reduced from $5 billion to $4.5 billion, particularly in the electricity sector. This reflects a trend among other European oil majors like Shell, bp, and Equinor, all of whom have scaled back their commitments to renewable energy. CEO Pouyanné justified this pragmatic shift by pointing to the declining profitability of low-carbon energy, explaining that energy prices were less volatile in 2024 compared to the exceptional levels of 2022 and 2023. Declining refining margins were also a factor.
Predictably environmental groups were not happy that the company increased its dividend to shareholders. However, even they would be churlish to denounce the company’s 2021 rebranding to TotalEnergies and the implied aspirations.
Not quite the intention in the original 1923 mission outline statement
TotalEnergies climb into the top ranks of the majors
