French oil company Total has appointed Patrick Pouyanne, head of refining, as chief executive to take the place of Christophe de Margerie who was killed in a plane crash in Moscow last week, Reuters reported.
Pouyanne, 51, had been considered as possible candidate to succeed de Margerie in the past and has a reputation as a shrewd cost-cutter.
The company also named Thierry Desmarest, a former Total CEO, as non-executive chairman. The appointments came less than 48 hours after de Margerie’s death.Â
Desmarest, 68, will stay on his chairman position until the end of 2015, after which the roles of CEO and chairman will be combined, Total said in a statement following an emergency board meeting. De Margerie was both chairman and CEO.
Total’s choice of a man from the downstream business is similar to Shell’s move to appoint Ben van Beurden, who formerly headed its refining arm, to become chief executive in 2013.
“Being in the downstream gives you more of a feel for costs, which is the big focus of the industry at the moment, whereas in the upstream you get a bit carried away sometimes, it’s kind of sexy,” Iain Reid, a BMO analyst in London, said.
“In the downstream it’s more about manufacturing and hard work – that’s what these big oil companies need at the moment.”
Total initiated a “soft landing” in capex last year and unveiled a plan to cut operating costs last September in an attempt to cut capital expenditure swollen during the years of high oil prices.
Pouyanne had a major role in merging Total’s loss-making “downstream” refining and petrochemical businesses, a shake-up designed to counter declining European gasoline demand and bring $650mn in extra cash per year from 2015.
Analysts said Pouyanne’s success in creating synergies and cutting costs in the refining arm could be used as a template for the rest of the group.
Desmarest’s experience will prove useful in revamping the group’s exploration business, after the failure of a so-called “high-risk, high-reward” strategy launched in 2011 which consumed more than $10bn but delivered no major oil discoveries.
“It’s no secret that Christophe de Margerie did not succeed in its costly transformation of the exploration division,” John Plassard, deputy head of Mirabaud Securities, said.
“A management split will rule out this kind of mistakes made by one man,” he said.
