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Michel

de Fabiani – Vice President, Franco-British Chamber of Commerce & Industry

05.03.2015 / Energyboardroom

Michel de Fabiani, Vice-President of the Franco-British Chamber of Commerce & Industry and former President of BP Europe, discusses business relations between France and the UK, and the prominence of the energy field.

Could you introduce yourself to our international audience?

I have worked 35 years for BP where I last held the position of President of BP Europe, which comprised the UK and Turkey and a close link to my colleagues responsible for Russia and Algeria.

I was based in Brussels and deliberately focused on Corporate Social Responsibility including external relations with various institutions such as the European Commission, the European Parliament, European professional associations, their national counterparts. I also addressed the social and environmental dimensions of the Group in Europe.

I was at the same time chairman of BP France, position that enabled me to assess on the ground the impact of decisions and policies determined at the European level.

As I aspired to return to Paris after retiring from the BP group at the age of 60, I became President of the Franco-British Chamber. I cherished this opportunity as I have always endorsed the British mindset and mentality.

For instance, I used to advocate to my children the necessity of learning proper English and computing in order to make their lives easier in the future. Today I might add another language skill!

I am so far the first and maybe the last non British President of the Chamber (he laughs). The only decoration I received was the OBE (Officer of the British Empire) and I am very proud to have earned this distinction!

What would you say is an agenda priority of the Chamber at the moment?

Business between the UK and France is increasing and very integrated. Of course, France and Germany have a very strong business relationship but, in my opinion, it is more competitive as reflected in the automotive, infrastructures and energy industries. Regarding the UK, there is more potential for cooperation and synergies!

Overall, there are many cross-business opportunities and common objectives. Both markets are similar in size, and London and Paris are both global hubs for business. We find many opportunities in London for French companies, as illustrated with the implementation of the Bolloré group and its system of electric cars Autolib’ in London, EDF with British energy, Keolis with its bus services or Veolia and many others in the infrastructure sector.

As for the Chamber, our role is to deepen these opportunities through small and medium sized companies. France is the first export market for British SMEs. The geographic proximity of both markets is a considerable asset. France is renowned for its good infrastructure and the high quality of its engineers, while French perceive the UK as a liberalized, accessible and large market. Our mission is to promote and encourage these trends.

What are the latest figures in terms of volume of trade between the two countries?

It is very balanced overall. Energy comes more from the UK as we stand more on the equipment side. We buy energy and financial services and provide infrastructure to our neighbors. The UK is a producer of oil and gas and France is a provider of infrastructures and services for oil and gas so both countries ‘singularities are quite complementary. France is a technology expert and supplies nuclear energy to the UK, while the UK exports its gas and oil to France. It is a global system that functions well.

Britain has, among other assets, London as a financial capital, but also Aberdeen, as a center of excellence for oil & gas. To what extent could cooperation in these fields be furthered?

French oil & gas companies such as Total or GDF Suez are important worldwide and I think there is more business for these companies to conduct in the UK. There are opportunities for shale gas in France and the UK, which should be explored. Regarding shale gas & oil, companies like Total or Vallourec already possess the know-how and their expertise could be exported over the Channel. Regarding the energy sector, France and the UK have led parallel and non-conflicting programs. The business relationship between France and the UK constitutes an interesting exception in the very competitive European environment.

Because of historical ties, it makes sense that a French company wanting to do business in Commonwealth countries would partner with a British company to increase chances of success. The same can be said for a British company willing to expand in North Africa or French-speaking Africa. How much of a reality is this today, and how are you pushing forward this logical assumption to French executives?

I think this is increasingly important although I doubt people have fully realized this yet. London is indeed not only an entry point to the British market but a gateway to the Commonwealth, which comprises important countries like India, Pakistan, Bangladesh, Gulf countries and Nigeria. This represents an opportunity for French companies to indirectly penetrate these considerable but complex markets.

Similarly, if British companies go to Paris, it acts as an entry point to French-speaking and North Africa, which constitute significant markets. We must remember that in a few decades, countries like Algeria or Congo will reach the development level of a country like Spain. There is therefore a huge potential for us to explore. African elites completed the same studies, master the same languages and abide by similar legislation systems. For British and French companies, existing trade and investment channels facilitate the penetration of emerging and growing markets.

What are in your opinion the major cultural differences between France and the UK?

In my view, the main distinctions reside in the definition of a contract and our legal systems. The contractual aspect is prominent in the UK – it is increasing in France, where the legal culture is less formal and litigious regarding contracts. In France, we are very keen on always creating new legislation. I also believe that the UK is more business oriented and pragmatic than France. The British think according to “what do we gain, what do we lose?” while the French tend to analyze the context before taking a decision. The ideal would be to combine the best aspects of both approaches.

How do you perceive the evolution of the energy sector and the major challenges it faces in the years to come?

The first wave of mergers in the oil & gas industry took place at a time when oil prices were low, a situation that could repeat itself and lead to huge opportunities for the business!

The current outlook of oil and gas prices is uncertain but not very high in the short term. However, even at an average price between current low prices and the high prices of 2014 there are still many prospects worth exploring. The existing fields in the Middle East or in the shale oil and gas areas can for example survive at this average price.

The question that remains unanswered is whether this is simply a bad period or a structural long-term situation? When you look at the dismantling of nuclear plants and the issue of nuclear waste, the nuclear industry, which was supposedly cheap, is no longer cheap. This supports higher energy costs. It is the same situation for the oil and gas sector with an increasing consumption and, where we need to always go deeper offshore. Overall, the trend is towards more costly energy, even in the Middle East where demand is increasing due to an increasing population and more sophisticated social needs. Marginal costs hence become higher. In the short term, I don’t think we will face a collapse of the sector but rather a slow-down. .

In such a context, what is the importance of Franco-British cooperation? What specific measures are you taking?

I believe Franco-British cooperation will evolve around “projects” rather than companies merging. It is therefore even more important now in light of low oil prices around the world, to foster partnerships between European countries and in particular, between France and the UK.

Our global perspectives must take Russia into account. This country faces today both technical and budget constraints. The US has also disturbed the market. But they have opened the idea of shale oil & gas as a new secure source of energy. The need for energy is so important today that all sources are welcome whether nuclear, green or shale energies in additional to oil and gas.

Nobody in Europe wants to break the shale oil and gas taboos although there seems to be a movement in UK willing to give it a try.

You don’t have a traditional background in this industry. How has this been a strength for you?

I am indeed not an engineer and when I first entered the oil industry, I was considered an outcast! My answer is that, in any industry, you need a set of various skills, expertise and ways to approach a matter. The engineering expertise is obviously critical to the energy sector but a geopolitical, pricing, business and marketing approach can come in handy. Ideally, upcoming generations should combine both, which was not feasible when I was as student. Back then, you either received Engineering or a Business degree but nowadays you can and should combine different academic fields.

How do you see the future of the Franco-British cooperation in the near future?

Very good! Companies like EDF, GDF Suez, Axa or Bolloré are increasingly present in the UK, while finance and insurance companies are supporting a growing number of French projects. Overall, I am confident that this trend will reinforce itself.

Beyond the Franco-British relationship, we must acknowledge and welcome opportunities in territories like India, Nigeria, and French speaking Africa, which all carry potential for favorable business outcomes.

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