PARIS // Twenty-seven years ago Arnaud Breuillac came to Abu Dhabi as an engineer for the French oil major Total. Now the company's president of Middle East exploration and production, he is in charge of operations in a region that brings Total nearly a quarter of its production and includes assets in countries from Yemen to Iraq.
Another task is renegotiating Total's concessions in Abu Dhabi that date as far back as 1939, and are due to begin expiring in two years. From Total's headquarters in Paris, he talks to The National about oil prices and sanctions against Syria.
Q: Other companies are said to be eyeing your onshore concession in Abu Dhabi. How would you like to renew the partnership?
A: We are not afraid of competition. We see the value of being a historic partner, and I don't want to make any commitments for the other companies. So what is clear is that we are highly mobilised to respond to the request that is yet to come from Adnoc [Abu Dhabi National Oil Company] and the SPC [Supreme Petroleum Council] about what will be the terms of engagement for this discussion about the future. We think that we need a business model whereby we have alignment of objectives, which is very essential for the long-term challenges that we have in the oil and gas industry, and also something where we as a company can fully contribute and deliver our capabilities. We think we can do more than what has been done up to now by being a bit more innovative about the business model, the operating model and indeed the commercial terms.
Q: How soon are you expecting a decision with Abu Dhabi?
A: I don't want to speculate on what Adnoc will propose. It's a bit too early to communicate on this. The whole subject of the timing is within the hands of Abu Dhabi and the SPC. We understand that they want to go ahead with this discussion and the selection of what will be the future business model and operating model sooner rather than later.
Q: How is the Syrian government's crackdown on protesters and international sanctions on Syrian oil exports affecting Total?
A: We have relatively small oil production in a joint venture with the national oil company of Syria. Here the production has been slightly reduced due to the fact that with the embargo on export of oil, the level of lifting has been reduced. But we are still producing to essentially feed the refinery system of Syria, so it's essentially for the domestic market. Our presence in Syria goes back a long way. We have a presence with Syrian employees, and whilst fully complying with the sanctions that are imposed on to us, we would like to maintain this activity, which is fully compliant with the sanctions. As long as we can operate safely and we do not have concerns for the safety and security of our staff, this is both expatriate and local staff, we really would like to continue our operations in Syria.
Q: How is volatility in the oil markets affecting your activities in the Middle East?
A: I'm not sure I see instability in the oil markets. What I see, on the contrary, is that despite a relatively hectic environment in the western economy, the euro zone and so on, despite what you consider as a gloomy economic environment in the next year or two, the oil price is relatively high - and stable. What we've seen in the last two months is that there's been a drop of the oil price around US$100 and then - poof! - it went up to $110. Today it is $112. So it looks very much as if the vision today is that energy demand will grow and oil will be in demand.
Q: Does oil at $110 a barrel allow you to do projects you couldn't do at $80 a barrel?
A: The higher the price of oil, the more challenging projects you can potentially launch. You need of course to look at it in the context of do you trust, do you believe that this oil price will stay for that long, and what price over the long term?
Now the [price] hypothesis we take within Total is something we don't communicate. If our competitors were to know, it is not necessarily to our advantage. But definitely we believe that the environment today in terms of oil price has proven in fact to be not too damaging from the point of view of economical growth. There are other factors today that are limiting this growth in the western countries.
It is a good level so that we can invest in quite sophisticated and complex projects, which we need to do. So if the oil price was to go too quickly too high, it would certainly have a negative effect on the economy and then you get into the boom and bust situation, which industry has known for many decades. If it goes too low, then you start to see a certain number of projects that are not developed, not sanctioned, and then you create the shortage of tomorrow and so on.
Q: Yemen LNG [liquefied natural gas] has been through an interesting year. Can you give us an update?
A: It's been operating now since 2009. The first year of full production was 2011, where we had the two trains at full capacity. Up to last Saturday, in fact, we had strong operating performance with a programme of production that was spot on the budget and the number of cargoes that we are planning to be lifted.
Of course, as you know, we had sabotage on the pipeline [last Saturday] just after midnight, so as a result of this sabotage, the plant has been shut down. Immediately after, we were able to secure the area and investigate the status of the pipeline. We have now started the repair of the pipeline.
Q: What is Total doing to hedge against potential attacks?
A: We have constant surveillance of the pipeline. It is for the authorities in Yemen to try and look after the infrastructure because this project of course is for the benefit of Yemen. We also have very good relations with all of the tribes that are living alongside the pipeline, so that they themselves are interested that this pipeline continues to operate in good condition.
Q: You started your career in Abu Dhabi 27 years ago - how is that experience shaping your job today?
A: I was very proud to start my career in the Middle East, because when you start in the oil industry, where better to start your experience than in the Middle East? And Total ABK, nearly 30 years ago I am afraid to say, was already at that time a very special operation. What is nice is to see that 30 years later Total ABK is still an extremely well-managed and high-technology field. In fact, today we produce approximately 10,000 barrels of oil per day, which is not that much compared with what it used to be 30 years ago. It is still a very large operation, very sophisticated, with many platforms, and for me it's a sort of a good illustration of how the industry has developed … For me to come back 30 years later and to see what this field has become and what the industry has become in the meantime is very fulfilling.