Gérard Mestrallet interview for BFM Business (extract)


Gérard Mestrallet

What is your analysis of the current depressed state of commodities prices? Is it the new normal, and how does it impact on the energy transition?

Everything depends on decisions yet to be made about carbon pricing. When you look at the current market balances, it wouldn’t be impossible for the oil price to recover a little. My own belief is that global market natural gas prices will remain at fairly low levels for some time, and that the same is true for electricity prices in the mature markets of Europe, the US and Australia. On the other hand, carbon pricing may partially reverse or at least change things, and its introduction was clearly stated in the COP21 final agreement. The important thing now is how it will actually be implemented. (…) The number of countries or regions covered by carbon pricing is now increasing, and what I hope to see is that we will have more countries with a carbon pricing policy and that these individual markets then become interconnected.

What will ENGlE be in 2018: that’s the question you were asked and to which you replied: a global leader in the energy transition. So what does that say about the situation today… what ENGIE is today?

We have put together a three-year plan with Isabelle Kocher, and that plan is well understood and has been well received. We want to lead the energy transition, which means having a presence in low-carbon or zero-carbon energy, renewables, hydropower, solar, wind, geothermal and biomass, but also in natural gas, which – if I may remind you – emits only half as much CO2 as coal, and no particulates at all. In our view, it’s also about energy efficiency. Conversely, we will have less involvement in coal, and we’ve also demonstrated that.

So does clean coal no longer exist?

We don’t have a great deal of belief in it. At least, in the short term. We’ve made the decision to engage in no new coal projects. We’ve already shut down one very large 1,000-megawatt plant at Dungeness in the UK, and we’ve just sold two coal-fired plants in Asia: one in India and the other in Indonesia.

You’re planning €22 billion of investment in new low-carbon and zero-carbon energy projects alongside a €15 billion disposals program. But the current market environment is hardly crying out for this type of disposal. Are you likely to find any interested investors?

We had already made more than one-third of those €15 billion in disposals on the day we announced the program. We’ve sold all our conventional power generating businesses to American investors at market prices. We believe – perhaps because we have a slightly different vision of the future – that the energy transition will be faster than our buyers think. In the same way, we’ve also found local investors in Indonesia and India for our coal-fired generating plants.

So does that mean you see yourself as engaging with this energy transition at just the right time, compared with your competitors? I’m thinking here particularly of German energy companies. Now is the right time… It’s not too late?

We started on the path to the energy transition before everyone else. We announced that two years ago, and just a moment ago, you made the point that our priority will be to lead the energy transition in Europe, and set the benchmark for energy development in the world’s emerging countries. It has become clear since then that the energy transition is a global issue. So now, we want to be the global leader.

Has the goal changed?

The geographic scope has changed, but our analysis of what is going on in the energy industry remains the same. In fact, we are even more convinced of it. Luckily, we weren’t confined solely to electricity generation in Europe as some of our competitors are; we were already a global business with a presence in Latin America, the Middle East and Asia, and these markets are not affected in the same way as the European and North American markets. Secondly, we are also involved in services. Two-thirds of the Group’s 155,000 employees work in services. That allows us to offer our customers integrated services. We don’t want to be just a supplier of electricity or gas; we also want to be a supplier of solutions and an architect of energy solutions. (…)

Who within the company will deliver this strategy plan? Will it be you as the future non-executive chairman, or will it be Isabelle Kocher?

It will be Isabelle Kocher. In any company, the person in charge is the Chief Executive Officer. And in May, Isabelle Kocher will – as our board decided last week – become Chief Executive Officer of the Group. (…) At this moment in the Group’s transformation, the Board of Directors felt it was time to hand over the operational reins of the Group to Isabelle Kocher, who has succeeded brilliantly in its internal restructuring ever since she joined us, and particularly since her appointment as Deputy CEO and Chief Operating Officer. So she has every quality required to become CEO at this time (…).