Despite the so-called U.S. shale revolution and American aspirations for energy independence, the CEO of major oil giant Total told CNBC he was not convinced it would happen any time soon.
“The U.S. is still relying on oil from the Middle East. It is not true the U.S. will be independent in oil — they continue to import,” Patrick Pouyanne, the new chief executive of French oil giant Total, told CNBC this week.
He stressed that the U.S. “will not get” energy independence because it still consumes far more oil than it produces.
“For me, the world today is interdependent. This idea that you could be (energy) independent — especially when you are the U.S., where you have many world companies; a country that is probably benefiting the most from the globalization of the world — is just something that is strange to me, I don’t believe in that,” Pouyanne added.
Oil prices have fallen dramatically in recent months – and at one point were down around 60 percent from highs in June 2014, on the back of a glut in supply and lack of global demand. Brent crude is currently trading around $59 a barrel and U.S. crude is at $51.
Related: Brent oil back above $60
The Organization of Petroleum-Exporting Countries (OPEC) has been blamed for the volatility in prices after it refused to cut production to support the cost of oil. Many saw its inaction as a bid to retain market share in the face of increased competition from U.S. shale oil producers.
American oil production has grown steadily from 5 million barrels per day in 2005 to 8.6 million last year, according to the U.S. Energy information Administration.
If OPEC was hoping a low oil price would put the brakes on U.S. oil production, it might have worked. Some 87 rigs were deactivated in the week ending February 6, according to oilfield services company Baker Hughes, after a drop of 90 rigs over the previous seven days. It marks the largest absolute reduction in a single week since Baker Hughes started keeping records in 1987.
‘Good news’ for US economy
But Pouyanne said that, despite anger from some at OPEC’s “game of chicken,” the U.S. was still a major oil importer and its economy was benefitting from a lower oil price
“Maybe the U.S. independent producers are not happy; the U.S. investors in oil and gas are not happy. But globally speaking, for the U.S. economy…(the lower oil price) is good news,” he said.
His comments come after Total reported a $6.5 billion writedown in the fourth quarter, mainly on its North American oil sands and shale assets, on Thursday. The oil major also announced cost-cutting measures to counteract the sharp decline in oil prices and said it would reduce investment by 10 percent from 2014’s $26.4 billion.
But Pouyanne was adamant that Total could “easily” withstand the lower oil price, despite its cost-cutting move.
“When you generate $25 billion of cashflow at $100 a barrel and eventually invest all of that — even before giving a dividend to your shareholders — that means we are at a very high level…we have a strong balance sheet we can face the situation for 1, 2, 3 years,” he said. “I’m not worried about (it), let me be clear.”
Pouyanne’s appointment as CEO comes after the former Total head, Christophe de Margerie, was killed when his private jet collided with a snow plough in October. De Margerie was one of the most recognizable of the world’s top oil executives and was a hard act to follow, Pouyanne said.
“Christophe was a unique personality. I worked for him for 12 years — he was visionary on many items, he has a real charisma,” he said, adding that it would be a “big mistake” to try to imitate de Margerie.