Crude Profits

He rose from drilling engineer to one of Europe's most powerful corporate financiers. But the challenges for Total's new CFO are just beginning.

“Because it is my first conference call, let me introduce myself,” said a voice on the other end of the line. “You can call me Patrick.” This casual introduction marked a changing of the guard at the top of corporate finance in Europe. Analysts on the August conference were hearing from Patrick de La Chevardière for the first time since he took over two months earlier as CFO of Total, the French oil giant. It was a momentous occasion, as de La Chevardière was stepping into a post held for 14 years by his hugely popular predecessor, Robert Castaigne. Although, like Castaigne, he has spent his entire career at Total, including five years as deputy CFO, it will “obviously” be a challenge to live up to such a “prominent personality,” he told CFO Europe as he approached the psychologically significant milestone of the first 100 days in his new role.

“Internally, when Robert said something, it was like the voice of God,” de La Chevardière chuckles. “I now have to prove that I am like God, which could take some time.”

As well as living up to the legacy of his mentor, the responsibilities that come with the CFO post at Total are formidable. The largest company in terms of market cap in the euro zone, Total employs nearly 100,000 people, pumps more than 2.3m barrels of oil every day and generated €160 billion in sales last year. From one of the thousands of offices in the company’s imposing headquarters — the tallest tower in the La Défense district of Paris, as nothing about Total is small scale — he must wonder about how much influence a single executive can have on a company of this size. (See “Giant Steps” at the end of this article.)

Called to Account

Fortunately for the CFO, soaring oil prices this summer made his first conference call relatively easy. “Our results are straightforward,” he told analysts, with record-high oil prices leading to record-high profits. The group reported adjusted net income of €7 billion in the first half of 2008, a figure that the press couldn’t resist breaking down into a remarkable rate of €1.6m an hour.

But future presentations may be less straightforward. The massive profits reaped by the international “super majors” — a group that includes Total, ExxonMobil, ConocoPhillips, Chevron, BP and Shell — have resulted in a backlash against contracts signed when the price of oil languished around $20 a barrel in the 1990s. “Resource nationalism” is on the rise, with host governments — which control some three-quarters of the world’s oil reserves — keen to renegotiate, or even scrap these agreements.

As a result, state-owned oil players such as Saudi Aramco, Petrobras and China National Petroleum Company — referred to as national oil companies, or NOCs — are growing in confidence and cash flow, challenging the super majors at home and, increasingly, abroad. A recent report by Moody’s Investors Service questioned whether the super majors could “retain a differential advantage based on capital resources and technology” as NOCs enjoy “a combination of foremost access to new resources, increasing technological sophistication, and political and economic agendas that do not necessarily put shareholder return as a first priority.”

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