The new chief of Total knows the central importance of Abu Dhabi to the company and has been intimately involved in the negotiations to secure a new concession in the emirate, according to his senior colleagues.
Patrick Pouyanné, who was head of Total’s chemicals and refining division, had been tapped in 2011 as one of two potential successors by his boss, Christophe de Margérie, who died last week in Moscow in a runway accident involving his corporate jet.
The company moved quickly to appoint Mr Pouyanné and to bring back former chairman and chief executive, Thierry Desmarest, to act as chairman of the board until the end of next year, when he is expected to hand over that role to Mr Pouyanné.
The death of Mr de Margerie left many in Total and in the industry in shock as he had been a widely liked and admired personality, especially in the Middle East, where he had headed up Total’s operations in the 1990s.
“He loved the Middle East and he was a friend of Abu Dhabi,” said Hatem Nuseibeh, president of Total UAE of Mr De Margérie. “I used to joke and tell him he had Arab blood he loved it so much. He is irreplaceable.”
Mr De Margérie’s force of personality had been a big factor in his dealings with those at the top of the oil establishment. But the transition in terms of dealings with Abu Dhabi would be “seamless”, said Mr Nuseibeh, who began his career as an oil reservoir engineer at Adco in the 1970s. “A few hours after he died, I was given instructions to pass the message to people in Abu Dhabi – nothing changes with the death of Christophe de Margérie.”
It is an indication of the importance to Total of the UAE, where the company has had operations since 1939. Total's UAE production last year was 260,000 barrels of oil equivalent, up 5 per cent from the previous year, and accounting for more than 10 per cent of its worldwide production.
The increase in production last year was mainly due to higher production by Abu Dhabi Company for Onshore Oil Operations. Total owns 75 per cent and is operator of the Abu Al Bu Khoosh field, and it has a 9.5 per cent stake in Adco, which operates the five major onshore fields in Abu Dhabi, and a 13.3 per cent stake in Abu Dhabi Marine, which operates two offshore fields.
The Adco licence expired in January this year and the Abu Dhabi authorities have issued a call for tenders for the renewal of the licence, the results of which are expected at the start of next year.
“Adco is central in our strategy,” Mr Nuseibeh said. The process has involved legacy companies – Total, Exxon, BP, Royal Dutch/Shell – being invited to bid last autumn to renew the concessions under new, less favourable terms, with follow-up “clarification” meetings thereafter with Adnoc officials. Adnoc will present its recommendations for a decision by the Supreme Petroleum Council.
“When I came to Abu Dhabi a year ago and we were preparing for all the high-level meetings, of course Patrick [Pouyanné] was part of the executive committee. I saw what he said and what he did for the Adco concessions meetings. He understands exactly the importance of Abu Dhabi,” Mr Nuseibeh said.
Mr Pouyanné was picked to lead Total partly because he is seen as a tough political operator. In France in the 1990s he had stints at the top level of domestic politics, working for former prime ministers Édouard Balladur and François Fillon. He comes from the rugby-playing south-west of France, is known for his big physique, dynamic approach and "sometimes volcanic" personality, according to Le Monde.
His Middle East experience includes a stint in charge of exploration and production in Qatar from 1999 to 2002, and more recently he has been in charge of downstream operations when Total opened the giant Jubail refinery in Saudi Arabia.
Apart from Adco, Total’s other assets in the UAE include a 15 per cent stake in Abu Dhabi Gas Industries, which produces natural gas liquids and condensates from the associated gas produced by Adco. Also, it has a 5 per cent stake in Abu Dhabi Gas Liquefaction Company and a 5 per cent ownership of National Gas Shipping Company, which owns eight LNG tankers and exports the LNG produced by Adgas.
Total has a 24.5 per cent stake in Dolphin Energy in partnership with Mubadala, a company owned by the government of Abu Dhabi.
amcauley@thenational.ae
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Mercer, the investment consulting arm of US services company Marsh & McLennan, expects its wealth division to at least double its assets under management (AUM) in the Middle East as wealth in the region continues to grow despite economic headwinds, a company official said.
Mercer Wealth, which globally has $160 billion in AUM, plans to boost its AUM in the region to $2-$3bn in the next 2-3 years from the present $1bn, said Yasir AbuShaban, a Dubai-based principal with Mercer Wealth.
“Within the next two to three years, we are looking at reaching $2 to $3 billion as a conservative estimate and we do see an opportunity to do so,” said Mr AbuShaban.
Mercer does not directly make investments, but allocates clients’ money they have discretion to, to professional asset managers. They also provide advice to clients.
“We have buying power. We can negotiate on their (client’s) behalf with asset managers to provide them lower fees than they otherwise would have to get on their own,” he added.
Mercer Wealth’s clients include sovereign wealth funds, family offices, and insurance companies among others.
From its office in Dubai, Mercer also looks after Africa, India and Turkey, where they also see opportunity for growth.
Wealth creation in Middle East and Africa (MEA) grew 8.5 per cent to $8.1 trillion last year from $7.5tn in 2015, higher than last year’s global average of 6 per cent and the second-highest growth in a region after Asia-Pacific which grew 9.9 per cent, according to consultancy Boston Consulting Group (BCG). In the region, where wealth grew just 1.9 per cent in 2015 compared with 2014, a pickup in oil prices has helped in wealth generation.
BCG is forecasting MEA wealth will rise to $12tn by 2021, growing at an annual average of 8 per cent.
Drivers of wealth generation in the region will be split evenly between new wealth creation and growth of performance of existing assets, according to BCG.
Another general trend in the region is clients’ looking for a comprehensive approach to investing, according to Mr AbuShaban.
“Institutional investors or some of the families are seeing a slowdown in the available capital they have to invest and in that sense they are looking at optimizing the way they manage their portfolios and making sure they are not investing haphazardly and different parts of their investment are working together,” said Mr AbuShaban.
Some clients also have a higher appetite for risk, given the low interest-rate environment that does not provide enough yield for some institutional investors. These clients are keen to invest in illiquid assets, such as private equity and infrastructure.
“What we have seen is a desire for higher returns in what has been a low-return environment specifically in various fixed income or bonds,” he said.
“In this environment, we have seen a de facto increase in the risk that clients are taking in things like illiquid investments, private equity investments, infrastructure and private debt, those kind of investments were higher illiquidity results in incrementally higher returns.”
The Abu Dhabi Investment Authority, one of the largest sovereign wealth funds, said in its 2016 report that has gradually increased its exposure in direct private equity and private credit transactions, mainly in Asian markets and especially in China and India. The authority’s private equity department focused on structured equities owing to “their defensive characteristics.”
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