Christophe de Margerie - Chairman and CEO of Total HARDtalk


Christophe de Margerie - Chairman and CEO of Total

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prices have risen by 500% in some areas. Millions of refugees are

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experiencing the coldest winter for years. Time for HARDtalk. We are at

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Monte Carlo for the World Policy Conference, an international

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gathering of politicians and business leaders from across the

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world. I speak to one of France's most influential and outspoken CEOs,

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Christophe de Margerie, boss of the energy giant Total. Does Europe have

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what it takes to meet the triple challenge of economic

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competitiveness, climate change and energy security? Welcome to

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HARDtalk. You are the boss of one of the world's biggest conventional oil

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and gas energy companies but is it fair to say that you are struggling

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to keep up with the changes in the energy market? We all are. It's the

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energy market that is changing and that is changing because the world

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is changing. What we are doing is not adapting ourselves to these

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changes but trying to pre-empt them. It seems to be arrogant but

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it's not. When you are investing such a huge amount of money, maybe

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too much, you cannot do it by just saying I will see and I will adapt

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myself. You need to take the position. It might be wrong, so you

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still have to keep a certain flexibility, but you have to repair

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for the future of your company, which means trying to understand

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what the energy world is going to be. It means understanding how the

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world is changing. Absolutely right but if you look at how the energy

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market is changing over these last five years, you can see the game

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changing impact of shale gas and oil in the US and the way that has

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changed pricing in international markets. You have been making

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strategic decisions for the last decade and somehow, it seems to me

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you have not been able to factor that massive change into your

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calculation is. That is true. Five years in this industry is a short

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time. We invest over 20 years, 30 years, sometimes more. And we talk,

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it's true, about shale gas. It's a revolution in the US. The US is very

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important but it not the whole world. No, but it does mean that in

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Europe, for example, Total has to look at its investments and

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commitments in a new way because in North America, you have a completely

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game changing energy revolution. That person who said that should

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know that we have been faced with this many times over our lives. I

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have been confronted with so many different revolution. We went with

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it. More oil, more gas. Great news. Five years ago, we were talking

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about peak oil and peak gas. Today, we are not talking about peak oil

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any more but peak capacity, -- capacity. It's great to have a lot

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of oil and gas but you have to develop it. But it must give America

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an incredible competitive advantage. What will be beneficial for the US

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industry as a whole... Essentially, it means that Europe cannot compete.

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I cannot compete in the product that is not production. In

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petrochemicals, we will definitely be faced in five years time with a

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lot of additional polymers, plastics, coming from the states at

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a cheaper price and very competitively. That is my concern. I

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want to talk about politics. You sit in a continent which is committed to

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the long-term decarbonisation of the economy and it seems to me that you

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in Total are ignoring this demand from the politicians of Europe that

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the economic model change and decarbonise is. It's true that I do

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not like the word decarbonise. Why? We are carbon. We have carbon in our

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bodies. That may be true but the fact is that by 2050, the member

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states of the EU... It's not yet voted. It's still a target. And I

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hope that we will not kill our industry because of putting in place

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crazy targets. 2050, who knows? But for the time being, we need all

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sources of energy. Just to say... Why is it a crazy targets? You know

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better than either the international energy agency, highly respected in

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your business, has said, and I'm quoting, to have any hope of meeting

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the two degrees target for the maximum rising global temperatures,

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we need to leave two thirds of current fossil fuel reserves

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underground. You talk to me about the potential for more and more

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exploitation. They are saying that many of those reserves have to be

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left in the ground. That's exactly my point. First, Europe is part of

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the world. Europe is not the world. Europe is already cleaner than

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anybody else and if you talk about France, France's nuclear industry is

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having a very low level of emissions per head. Lower than Denmark. That's

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very important to know. And just thinking that Europe in itself or by

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itself will be reducing the emissions, let's try to focus where

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those emissions are coming from. And don't say that we are against global

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warming and climate change... It is the opposite. Total is at the head

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of the fight. Total, as you know, is the number one energy company in the

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solar energy business. We acquired a company in silicon valley. It cost

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over $1 billion. Quite a commitment. 1.4. If you look at the overall

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expenditure of your company in research and development, let's say,

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how much of it is targeted at renewables and how much of it is

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spent constantly looking for new forces of fossil fuels? We are

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always looking at the best ways to explore end-use those fossil fuels.

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We cannot be against greener energy. The first goal of Total is

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efficiency. When we invest in our new development, we invest in how to

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reduce consumption. For Total and for our consumers. I'm struggling

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because I understand that from your company, you are planning to spend

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at least 11 billion euros over the next 15 years on tar sands

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production in Canada, in Alberta. Which is a very small part of our

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portfolio. Very small. I'm sorry, 11 billion euros does not sound like

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small change to me. It's the most inefficient fuel product you can

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possibly imagine. Al Gore called it the dirtiest fuel on earth. Well,

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why don't you say this to the prime minister of Canada and of Alberta?

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Why Total? Everybody has to take responsibility. If the Prime

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Minister of Canada were sitting in this chair, I promise I will be

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asking him this question. You are the boss of one of the major energy

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companies. You have made a decision. I have made a decision to face the

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demand in a responsible way. To look only to renewables, that cannot

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exist. We are in the solar energy business. I was criticised for

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investing in that. I was criticised, people saying it was not

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my job. If everybody did their job public, the world would be better.

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What we need is energy. I capable, as Total, to deliver oil and gas in

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a clean away because it's needed. I just want to understand why, when

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you have a range of choices in front of you, why you think it's right for

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Total to engage in an extraction process in Alberta, Canada, which

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means that three tonnes of sand and soil is dumped for every barrel of

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oil that is produced, according to Friends of the Earth, and which

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produces toxic tailing leaks, which already cover 176 square kilometres

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of wilderness and which are still growing? Why did you believe it is

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the right thing to do to pursue that business? First, if you know what we

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are doing, we are reducing our investment in Alberta. Everybody

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knows that. Why? Because as you just said, we might not need any more as

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much of that oil sand as in the past. So it was a mistake? Know,

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things have changed. Today, with shale oil, there is substitution. So

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we have other sources of energy, cleaner energy. But they are still

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fossil fuels. We are not making mistakes, we are adapting ourselves.

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Today, everybody says calm down over the production in Alberta because

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for the time being, we do not needed. We slow down production. But

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the environmental groups... We do not do things to please people. It

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will only please them is rather than saying you are as ending to see what

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the market does, it will only please them if you say, you know what? We

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have assessed our long-term strategic options and we no longer

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believe in this heavy oil tar sands. That's not so easy because

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again, that's what they say. But then they do not ask about the

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jobs, the employment, all of those things that are part of the economy.

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You cannot just be a nice person and say do this, don't do that, and then

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tomorrow... But you don't want to be a nice person. I don't want to be a

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nice person to please, I want to be a nice person, which is to say,

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doing my job properly. I don't want to invest $20 million and then stop.

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James Hansen, a respected climate scientist, says that unless we leave

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these marginal fossil fuels in the ground, we have no chance of

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averting dangerous warming of the planet. OK, let's tackle this issue.

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Let's face it because it's a very important issue. Who says what and

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who is doing what. The same persons will tell us that you are

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responsible for bringing energy to your clients. You are responsible

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for bringing electricity. You are responsible for people living and

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not dying. Who takes the decision for what we leave in the ground and

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what we produce and what will be the source of replacement? If there is

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any shortfall of electricity in this hotel today, who will be fingered?

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Us. What are you doing, guys? If there is any problem at the pump...

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And you think we should trust you to make the right decision for the

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planet? Know, I just doing my job. I'm not in charge of the planet. You

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are only responsible to your shareholders. And that's what many

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people in the world are worried about when you are put in charge of

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making key decisions. No, I'm not making decisions. The key

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decision-makers are the politicians. They vote. I not... You know, it's

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very funny. I am not allowed to tell you what you should do. I'm not

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allowed. Work on renewables, we do it. Reduce emissions, we do it. Even

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if we are told by our shareholders that it's not our job. We do more

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than this because we feel responsible. But then politicians

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have to take responsibility, which means that they want more

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renewables, the price for consumers will be higher. I understand that

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you have to work within a context that is framed by public opinion and

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political decision-making. One quick thought on one other strategic

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challenge. Fracking and shale gas exploration in Europe. You are

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French -based company. Your French president has said there will be no

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shale gas production in France as long as he is president. Other

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European countries have said the same thing. What is your view of

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Europe's position on shale gas exploration? In Europe, I would say

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that we are not developing as much. Are you wanting to move into

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fracking in the UK in a big way? If it is possible to do that. Why not?

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Many people in Britain would be worried to hear you say that. Some

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will be and some will not be. That is democracy working. If you want to

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move to Britain and invest in British shale gas, you have to sell

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to the British people a production which according to many

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environmental campaigners damages groundwater supplies, damages

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groundwater communities. I disagree. You think you can sell

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that when the French government says they will not allow fracking? Yes.

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It is we are an international company. I pay my taxes in the UK. I

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pay billions in taxes in the UK, not in France. Why? Because I am making

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money in the UK. They consider us as a British company, not as French. I

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am French. My company works on 130 countries in the world. In all of

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these countries, I respect the decision of that country and the

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decision of the Parliament. I want a couple more quick answers. You seem

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very determined to move back into Iran as soon as possible. I said the

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opposite. But I will continue to consider the proposition of the

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group. I said that we will not do anything in Iran until the embargo

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is lifted. Respect the laws. What I have been saying, I said what is for

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sure, no real peace process will move without Iran being involved.

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That is the only thing I said. On the rest, Total, we will not move

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until the embargo is lifted. Why? That is the way it should be. You do

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not have any choice, that is the law. Exactly. You have settled out

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of court this very year with the US federal authorities to the tune of

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$245 million because of their claims that you violated antibribery laws

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in your dealings. Your team in the Middle East and the dealings with

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the Iranians are meant. It is true. -- government. It is rather

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important. It was rather important. The US, you can have this kind of

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discussion. Did you bribe Arabian officials? Of course not. Then why

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did you pay $245 million? It is a very strange system. They are not

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allowed to talk about the settlement. Not without approval and

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we are out of what we call the three-year period under which we are

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certain control. So you cannot tell me exactly what happened? I can tell

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you it did not happen. But if Iran opens up, why should we not go? Why

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shouldn't you go? It comes down to this and they want a simple answer.

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Do you believe and trust that the President represents a new start, an

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assembly that you can do business with? I have not been discussing

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with them. Until I can, I will not. Some of your team have been talking

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to them. We have not, it is not allowed. It is not Europe. The

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American government. I will always be very careful, especially with

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Iran. At the same time, you cannot see that Iran goes back to the

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international community because it is acceptable. We had problems in

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the past. In the United States, it was not illegal in Europe, it was

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illegal in the States. There were some specific things in the US

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culture. We were almost a comma. But to be clear, I understand the way

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you have to be careful in your answers, but just to be clear, you

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see a major potential for your company in Iran. As for when the

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international community and situation allows. I see more

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potential in Africa, Latin America. I have been signing contracts in the

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UK and Brazil. Especially where we feel the best situation is. Iran is

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not part of my priorities. And this leads us to the final fought for the

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interview. You just emphasised one more time what a truly global

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company Total is. It is an international perspective. More and

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more of your business is not in France. The headquarters in France,

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we, marketing, business in France. But you face industrial action, you

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face a government that is imposing new taxes on you to the tune of

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hundreds of millions of euros per year. Would you say that your

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frustration with France is such that you could one day leave France?

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Frustration exists, but it exists when it becomes difficult to

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change. Let us be honest. Is the president very bad for your

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business? No. In France in the refining sector, we are losing

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money. Do we do not pay taxes. IP more taxes all over the world than

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in France. A lot of people are frustrated. That is the way the will

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exists in France. -- law. You cannot tax revenues that have already been

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taxed another country. Why is it that in the recent past you have

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talked about, and this is a direct quote, our real problem is the state

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in France. He said 55% of GDP, a nanny state, this is all stuff you

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have said about your own country. You do not sound particularly

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happy. I am not happy as a citizen. I am French. I am Total. It is not

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the same. I tracked to avoid my personal view is becoming that of

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Total. I need to be clearly neutral. I know some friends would like to

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see me. I represent everybody. It is not normal. I was wrong. 57% of GDP

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is controlled by the state. It is totally abnormal. But I am not

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against the state. It has become responsible over too many things. In

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France, people like it. There is a problem, the state. Companies like

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my need to be more vocal. They need to say why it is the way it is and

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why it can be better. Why it is not so easy. French CEOs should be more

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vocal. To say that they are against it. What are they offering? Do you

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feel confident that Total will still be one of the world's biggest, most

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successful energy companies five years from now? Yes. No doubt.

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Christophe de Margerie, we have two ends there. Thank you very much for

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being on HARDtalk. It was a pleasure.

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Pretty unsettled week all in all coming up, particularly midweek

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onwards. Most of the activity will be coming off the Atlantic. It

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should not be too

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