ABU DHABI—Major international oil companies (IOC) have re-adjusted their strategies in order to weather the low oil prices cycle, and also to benefit from the opportunities presented during the low cycle, according to panelists speaking during a global business leaders panel as part of The Abu Dhabi International Petroleum Exhibition and Conference (ADIPEC) 2017.
As heads of major oil and gas companies, Patrick Pouyanne, CEO, Total, and BP’s Group Chief Executive Bob Dudley, admitted that they were lucky to head large companies, as they were better suited to weather the price storm. “[The] business model of big companies was very resilient which helped us to weather storm,” Pouyanne said.
Pouyanne outlined lessons learned in the last three years, which included excellence in basic things, integration and the ability to grab opportunities offered during downturn. He said that external circumstances forced his company and other oil and gas players to adapt to the new situation.
“But I don’t think you change your culture. One of the values we have is pioneering spirit,” he said. “We need to be able to combine a strong discipline on one side and still an ambition to grow, because we need to think long term. We need to answer to the demand of energy for the world.
“This is where we have to adapt fundamentally,” he continued. “Discipline means to have a permanent eye on what is the breakeven of our portfolio of assets, because we don’t control the price of oi. We just rediscovered that.”
Pouyanne said that during the last three years, Total returned to basic to excel in things that it does control.
“Integration is the second lesson we learned from the cycle,” he said. “We saw downstream better, and integrated the gas value chain.”
Pouyanne also said that the downturn also offered various opportunities to his firm, adding that his company managed to engage in many projects during the low cycle at lower price which boosted its medium- and long-term revenue.
BP’s Dudley said that his company had to deal with crises and act fast and take decision. “We now have to be mindful of how we grow because we have to tackle carbon emissions at the same time as meeting the world’s growing energy needs, he said. “We need to find a way to do both things and they’re not mutually exclusive. We want to be realistic about how our world has changed and needs to change.
“The new reality of abundant new energies is really out there,” he continued. “It’s going to mean some downward pressure on prices … so we need transformation.”
Dudley used the phrase “step change” to discuss the strategy of his firm during the low cycle of the industry. “The first is simplicity in what we do. Second is technology, so vitally important. The third is efficiency,” he said. “That’s what we have to do in the broad scale all around to have strategies for a successful new world. It’s a bit simplistic, but each one of those things is very important.”
The two men highlighted how corporate cultures helped companies weather the downturn. “Companies, all of us, have slightly different cultures. There’s a great business phrase that’s probably 20 years old that culture trumps strategy every time. You can have a great strategy, but if you don’t have a culture to execute it it’s going to be difficult,” Dudley said.
Pouyanne added that oil and gas companies need to be pragmatic and help politicians in their drives to create jobs and serve their nations, rather than given lessons. He said that energy companies are also investing in new and renewable energy so they we can face the economic reality.
“Because we are in the energy world, we must also help these politicians to face the reality, and not accept just to be accused because we do oil and gas. No, I'm very proud to be in the oil and gas industry," he said.