Abstract: From Disdain to Strategic Business: Natural Gas Networking in TOTAL: Or How a Large Oil Company Learned a New Business (1953-2000)

Eric Godelier and Catherine Malaval

Abstract

If nowadays natural gas appears to be a modern source of energy, this has not always been the case. At the beginning, gas was considered a source of problems by engineers and a scrap by top managers of French oil companies. TOTAL, one of the bigest French oil company, profoundly changed its analysis of the gas business and presents a very good example of a business and strategy evolution. After several economic "coup" in France (Saint-Marcet, Lacq) or in Algeria (Hassi R'Mel), gas became a important business during the 1970s. Changes in technology (deep drilling and boring methods, liquefaction, gas tankers) enabled to decrease prices and/or find new gas reserves. Nevertheless, the lengh of gas projects, their complexity, and a low average profitabilty rate in comparison with oil, obliged the gas managers to develop sophisticated strategy of empowerment and networking within the board of directors and top management of their companies. The first official gas departments were created in the early 1970s, both in Elf and CFP. Experienced managers in their mid carriers were recruited or appointed then. They have made all their professionnal lives in this branch. Their difficulty was to find to what part of the structure attached the gas direction: top management, exploitation/production or trading/marketing. During this fifty-year history, the choice has evolved. The history of TOTAL gas department is a good exemple of how, in a Chandlerian point of view, a big coproration has succeeded in building new organizational competencies.