With the rapid fall of crude oil prices, oil companies are increasingly under pressure. Many experts suspect the price plunge to be a trial of strength between OPEC, the organization of oil exporting countries that is dominated by Middle East producers, and U.S. shale oil producers.
Commentators say the Saudis are testing the pain threshold of the American industry, as fracking is comparatively expensive.
The harsh price drop is affecting all major producers, with BP even slipping into the red by late 2014 and other big players – such as Exxon Mobil, Royal Dutch Shell and Chevron – seeing their profits melt away.
Handelsblatt spoke with Arnaud Breuillac, president of exploration and production at Europe’s third-largest producer Total, about the future of the oil price and damage control in times of crisis.
Mr. Breuillac, the price for oil has collapsed by more than 40 percent in recent months. What does that mean for Total’s production targets?
We are not stopping or slowing down any projects that we have already started. It is financially painful to give up deep-sea oil projects that are already underway. In that case, we would be talking about losses of several billion dollars.
We are sticking to our path, but slowing down our investment in existing oil fields or infrastructure. This doesn’t affect the big projects.
There has been talk about cost-cutting at Total for a long time.
Our former CEO Christophe de Margerie, whose life came to a tragic end, had in September 2013 correctly said that the oil industry has a problem. Back then, the oil price was stable at prices around $100 per barrel.
But expenses rise between 7 and 8 percent per year. So even at stable prices, companies were spending more and more money. Mr. De Margerie warned that rising costs would sooner or later limit the further development of the oil industry.