Total Essay

The Total Oil Company, with its headquarters in France, is one of the six “supermajor” oil companies in the world, with its core business being oil and gas—including both exploration and production— and trading, shipping, refining, and marketing of gasoline, liquid petroleum gas (LPG), aviation fuels, lubricants, chemicals, petrochemicals, fertilizers, and other products. It has also diversified and is involved in coal mining and power generation. Some products are sold through retail outlets such as gasoline stations and through other companies.

As an entity, it was founded in 1924—six years after the end of World War I—to ensure that France did not have to rely on companies from other countries. It was formed at the behest of the then French prime minister, Raymond Poincaré. After World War I, Poincaré did not want France to have to be reliant on Royal Dutch Shell, as the Netherlands were neutral in the war. In some ways, the initial structure was modeled on British Petroleum (BP). As a result, the Compagnie Française des Pétroles (French Petrol Company; CFP) was established on March 28, 1924, with Ernest Mercier as its founder. Born in Algeria to a Protestant Republican family, he was a graduate of the prestigious École Polytechnique and had worked in the electricity sector. With government help, he managed to obtain the support of about 90 banks. It was not until 1929 that the company was listed on the Paris Bourse (stock exchange). During the 1930s, Mercier became heavily involved in politics.

Establishing The Company

The first major move made by CFP was to establish its source of oil. This came from the 23.75 percent share of the Turkish Petroleum Company, which had been held by Deutsche Bank and was awarded to France as World War I compensation after the San Remo Conference of April 1920. The French government assisted with building refineries for the oil from Iraq, but CFP never had the range of production that the Anglo-American companies did, leading to business rivalries and resentment. The Turkish Petroleum Company was renamed the Iraq Petroleum Company, and it discovered large oil fields in 1927, continuing production until the end of operations there in 1961.

The major flare-up between CFP and the AngloAmerican oil companies was in 1946. The French held out for a larger share of the Saudi Arabian oil fields, recognizing that these were much more important than those in Iraq. CFP, however, did not get access to Saudi Arabia and started to turn its focus on Iran. In a deal negotiated with the Iranian prime minister, Mohammed Mossadeq, CFP agreed to take a 6 percent share in the new Iranian Consortium being established in Iran, and was soon also holding a third of the shares in Abu Dhabi Marine, as well as their share in Iraq, unchanged since World War I. Regular problems occurred, with CFP anxious to increase its permitted production level and angry at the restrictions placed on the company.

In 1956, CFP discovered a large oil field in Algeria and started working heavily with the Algerian government (northern Algeria was then a part of France, and the Sahara desert, where the oil was found, was a French colony). This discovery encouraged French governments to want to retain Algeria, in spite of their starting to lose the Algerian war for independence. During peace negotiations, the French had hoped to retain control of the oil fields, but the Algerian nationalist leader Ahmed Ben Bella recognized the wealth from oil and insisted on their becoming Algerian, and after independence, the Algerian government nationalized the oil fields in their country, and they were put under the control of the state oil and gas company, Sonatrach.

Global Expansion

During the 1960s, CFP, using the brand name Total, was spreading through Africa, establishing petrol stations in much of French Africa. In 1966, the French company Entreprise de Recherches et d’Activités Pétrolières (ERAP) was formed through the merger of two state-owned entities, and it started establishing gasoline stations under the name ELF, later Elf Aquitaine. CFP continued to grow, and in 1985 it was renamed Total CFP, and six years later, it became known simply as Total.

In 1999, following the takeover of Petrofina, it was renamed Total Fina, and in 2000, it merged with Elf Aquitaine to become TotalFinaElf. However, in 2003, the company reverted to its former name, and is again called Total. Altogether, it employs 96,400 people directly, and another 15,000 indirectly, in some 130 companies. This makes it, together with its subsidiary companies and affiliates, the fourth-largest publicly traded and integrated international oil and gas company in the world. It is now the second-largest petroleum company in France, with most of its oil sourced in, and most of its refining still taking place using oil from the Middle East.

Bibliography:

  1. A. Adelman, The Genie out of the Bottle: World Oil Since 1970 (MIT Press, 1995);
  2. William N. Greene, Strategies of the Major Oil Companies (UMI Research Press, 1985);
  3. Adrian Hamilton, ed., Oil: The Price of Power (Michael Joseph/Channel Four Television Co., 1986);
  4. Anthony Sampson, The Seven Sisters: The Great Oil Companies and the World They Made (Hodder & Stoughton, 1975);
  5. Total corporate, www.total.com (cited March 2009).

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