Oilman defiant under siege

the Hilary Clarke interview; Despite being pilloried over last week's results, Enterprise's chief executive insists the company is on the right track

PIERRE JUNGELS knows what it feels like to dodge bullets. For five years, the ebullient chief executive of Enterprise Oil, Europe's biggest independent exploration company, held the fort in Angola for oil giant Petrofina during the African nation's bitter civil war. Even so, the Belgian oilman with the build of a Texan was feeling slighted, hurt even, by the snipes fired in his direction at the end of last week by the financial press.

It had been a difficult couple of days all round for the 54-year-old engineer. On Thursday, Enterprise reported an 85 per cent drop in first- half net profits to pounds 12m as the slump in oil prices took its toll. On announcing these results, Jungels, true to his reputation for outspokenness, broke ranks from other oil companies that had already reported their earnings and said he believed oil prices would remain low for the rest of the year. As a result, he told the world, the company might slash its dividend. The share price immediately plummeted 12 per cent.

Then, to top it all, the Observer column in the Financial Times ran the following day what Jungels describes as a "bitchy" attack on the opulence of his office overlooking Trafalgar Square. It also referred to Enterprise's shares "dropping like a paralysed partridge", in reference to his penchant for shooting.

Its not always easy being Belgian and heading a company as British as Enterprise, created from the oil exploration and production interests of British Gas when the latter was privatised in 1983.

"Usually I'm the cigar-smoking, swearing Belgian," he says, drawing on a gentler Silk Cut cigarette.

After such treatment, it is to his credit he still agrees to be interviewed by a journalist and even manages to inject a fair amount of humour into the proceedings. When the photographer arrives he hurriedly puts on his jacket "to avoid a little pointed remark about my wearing braces".

But then no one ever said heading an oil company was a bed of roses. "It's one of those industries that can not win. It has an image of being as powerful as some governments, uncaring and aggressive and on top of that, it sells something no one would buy by choice," says Jungels, with just a hint of a French accent.

"In reality, we are at the cutting edge of technology, staffed by sophisticated intellectuals and not rough-necks as Hollywood would like to portray them in films like Armageddon. Our nearest equivalent in terms of the kind of people employed would be the pharmaceutical industry. But unlike them, we don't have a Viagra."

So what is the wonder cure Jungels has up his sleeve for Enterprise that has so far been lost on the financial markets? Firstly, he believes, the company's fundamentals are better than the majority of its competitors because its producing assets are in the UK and Norway, which contribute to earnings even at the low oil price of $12 a barrel, he says. The eight new fields that will start production over the next two years will, he argues - even at that price - all return more than 15 per cent on capital invested. Secondly, the company plans sharp cuts in exploration spending to pounds 125m next year from pounds 180m this. Jungels also plans to squeeze costs hard, bringing them down from pounds 6.20 per barrel of oil down to pounds 5.80.

Jungels admits Enterprise's offices, which resemble a massive Victorian indoor botanical garden, are expensive. But then such opulence is necessary for a company that needs to play host to government ministers. "We can probably squeeze ourselves onto fewer floors and sub-let part of this building, but that won't make any real difference to Enterprise's profits. It will just make a statement that we are pushing down overheads."

Reduction in staff numbers are unlikely in a company whose 750 employees are nearly all graduates and who can count 50 PhDs among them and an average salary of pounds 45,000.

"Following the BP and Amoco merger [in August], the whole industry has again been asking if size matters. The answer in the refining market and chemicals is clearly: `Yes.' That's where in the oil industry the majority of people are employed. But for an exploration company like Enterprise, the issue not employment of people, it's what we do with the investment."

Part of Jungels' recovery plan is to pull out from the more risky areas where it is exploring for oil, such as Vietnam, Bulgaria and Cambodia and possibly Peru. "I would have thought all this was a very good message for investors. But obviously if the sector is in doubt, then it is difficult to convince them." Enterprise shares recovered slightly by the end of the week, closing up 25.5p at pounds 3.55.

Jungels has been battling with low oil prices for some time now. He joined the company in 1996, taking over the chief executive post from the chairman and founder, Graham Hearne. It was the year in which Enterprise posted its best-ever profits. "The oil price went south from there. Magnificent timing."

But then, Jungels has a penchant for turning up just before adversity sets in. His best career break was being sent by his company at the time, Petrofina, to measure an oil field in Angola. When war broke out, he found himself catapulted into the subsidiary's chief executive job.

"The Portuguese running the Petrofina subsidiary there had to leave. It led to an extremely quick promotion because no one else wanted the job. It was a question of being in the wrong place at the right time," he laughs.

Jungels, who was educated at the University of Liege and the Californian Institute of Technology, continued in various senior management jobs for Petrofina before his move to Enterprise in 1996, via a brief stint heading British Gas's exploration and production department.

The BP/Amoco merger has sparked a merger frenzy in the oil industry, its latest manifestation being the combining of Texaco and Shell's refining and marketing operations in Europe. Even so, Jungels says a second attempt to merge Enterprise with the UK's second biggest oil explorer, Lasmo, following Enterprise's abortive attempt at buying the company in 1994, is unlikely. That is because Lasmo operates in high-risk, high-return areas such as Algeria, Libya, Venezuela and the Caspian region, whereas Enterprise is mainly in the "safer" but less potentially profitable OECD countries like the UK, Norway and the Gulf of Mexico - a fact that has led to criticism from investors. One oil analyst commented: "Enterprise is an OECD oil player when all the action is in the non-OECD areas and that's their main challenge. Jungels is very outspoken, but action speaks louder than words."

Even Jungels admits that while the OECD areas might offer democracy, that does not necessarily mean Enterprise is better off. "From time to time they will throw a brick in your quiet little lake by talking about tax reviews and changes." In short, while you might risk getting your throat cut in Algeria, the government does not raise taxes every two to three years like here. Moreover, says Jungels: "There are technical risks in the North Sea which don't exist to the same extent if you drill in the desert of Libya. But at least, if there are risks in the OECD area, they apply to everyone the same. And there is absolutely no corruption, which is not the case elsewhere."

His Angolan experience made him think a lot about the follies of human kind, and the chaos and destruction of war. His favourite book is by an American historian called The Distant Mirror, about the Hundred Years War.

That said, concern about political problems in Nigeria and Russia has edged the oil price up slightly. Jungels would rather see a more co-operative and diplomatic solution to the industry's current crisis. "Other than destructive things like civil war in Russia, the only thing that could bring the oil price substantially back up is a cut in production by OPEC rather than just talk about it. And a very hard winter would help as well."

Jungels, who - apart from his native French and impeccable English, speaks fluent Portuguese and understands Italian - is, as all good oilmen should be, well versed in international politics, as happy to talk about coalition politics and angry fishermen in Norway as he is about the "lunatic" Taliban Sunni Muslim fundamentalists that have taken control in Afghanistan. The US, he believes, is making a big mistake by continuing its embargo on the Shiite government of Iran which, 20 years after the Ayatollah Khomeini's revolution, is emerging as one of the most stable countries, and oil producers, in the region.

All that is a long way from Newbury, where Jungels now lives with his wife and two step-children. Despite his pounds 345,000-a-year salary, Jungels says he drives a battered BMW station wagon, and travels to work every morning on public transport. He has two other children from an earlier marriage. Like many of his compatriots, he loves animals and has three horses, "two old boys and a 28-year-old female pony" and a black Labrador.

His main passion, though, remains his work. "There is nothing better in life than watching the test of an oil discovery," he says.

Suggested Topics
PROMOTED VIDEO
Sport
David Moyes gets soaked
sport Moyes becomes latest manager to take part in the ALS challenge
Life and Style
techCould new invention save millions in healthcare bills?
Voices
A meteor streaks across the sky during the Perseid Meteor Shower at a wind farm near Bogdanci, south of Skopje, Macedonia, in the early hours of 13 August
voicesHagel and Dempsey were pure Hollywood. They only needed Tom Cruise, says Robert Fisk
News
peopleEnglishman managed quintessential Hollywood restaurant Chasen's
Life and Style
food + drinkHarrods launches gourmet food qualification for staff
Arts and Entertainment
Michael Flatley prepares to bid farewell to the West End stage
danceMichael Flatley hits West End for last time alongside Team GB World champion Alice Upcott
News
ebooksAn evocation of the conflict through the eyes of those who lived through it
News
Members and supporters of the lesbian, gay, bisexual, transgender (LGBT) community walk with a rainbow flag during a rally in July
i100
Life and Style
Black Ivory Coffee is made using beans plucked from elephants' waste after ingested by the animals
food + drinkFirm says it has created the "rarest" coffee in the world
Arts and Entertainment
Jamie T plays live in 2007 before going on hiatus from 2010
arts + entsSinger-songwriter will perform on the Festival Republic Stage
Life and Style
food + drinkThese simple recipes will have you refreshed within minutes
News
Jermain Defoe got loads of custard
i100
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

Business Analyst - Banking - London - £550 - £650

£550 - £650 per day: Orgtel: Business Analyst - Traded Credit Risk - Investmen...

Data Centre Engineer - Linux, Redhat, Solaris, SAN, Puppet

£55000 per annum: Harrington Starr: A financial software vendor at the forefro...

.NET Developer

£600 per day: Harrington Starr: .NET Developer C#, WPF,BLL, MSMQ, SQL, GIT, SQ...

Data Centre Engineer - Linux / Redhat / Solaris / Puppet / SAN

£65000 per annum: Harrington Starr: A financial software vendor at the forefro...

Day In a Page

All this talk of an ‘apocalyptic’ threat is simply childish

Robert Fisk: All this talk of an ‘apocalyptic’ threat is simply childish

Chuck Hagel and Martin Dempsey were pure Hollywood. They only needed Tom Cruise
Mafia Dons: is the Camorra in control of the Granite City?

Mafia Dons: is the Camorra in control of the Granite City?

So claims an EU report which points to the Italian Mob’s alleged grip on everything from public works to property
Emmys look set to overhaul the Oscars as Hollywood’s prize draw

Emmys look set to overhaul the Oscars as Hollywood’s prize draw

Once the poor relation, the awards show now has the top stars and boasts the best drama
French connection: After 1,300 years, there’s a bridge to Mont Saint-Michel

French connection: After 1,300 years, there’s a bridge to Mont Saint-Michel

The ugly causeway is being dismantled, an elegant connection erected in its place. So everyone’s happy, right?
Radio 1 to hire 'YouTube-famous' vloggers to broadcast online

Radio 1’s new top ten

The ‘vloggers’ signed up to find twentysomething audience
David Abraham: Big ideas for the small screen

David Abraham: Big ideas for the small screen

A blistering attack on US influence on British television has lifted the savvy head of Channel 4 out of the shadows
Match of the Day at 50: Show reminds us that even the most revered BBC institution may have a finite lifespan – thanks to the opposition

Tom Peck on Match of the Day at 50

The show reminds us that even the most revered BBC institution may have a finite lifespan – thanks to the opposition
Air strikes? Talk of God? Obama is following the jihadists’ script

Air strikes? Talk of God? Obama is following the jihadists’ script

The President came the nearest he has come yet to rivalling George W Bush’s gormless reaction to 9/11 , says Robert Fisk
Ebola outbreak: Billy Graham’s son declares righteous war on the virus

Billy Graham’s son declares righteous war on Ebola

A Christian charity’s efforts to save missionaries trapped in Africa by the crisis have been justifiably praised. But doubts remain about its evangelical motives
Jeremy Clarkson 'does not see a problem' with his racist language on Top Gear, says BBC

Not even Jeremy Clarkson is bigger than the BBC, says TV boss

Corporation’s head of television confirms ‘Top Gear’ host was warned about racist language
Nick Clegg the movie: Channel 4 to air Coalition drama showing Lib Dem leader's rise

Nick Clegg the movie

Channel 4 to air Coalition drama showing Lib Dem leader's rise
Philip Larkin: Misogynist, racist, miserable? Or caring, playful man who lived for others?

Philip Larkin: What will survive of him?

Larkin's reputation has taken a knocking. But a new book by James Booth argues that the poet was affectionate, witty, entertaining and kind, as hitherto unseen letters, sketches and 'selfies' reveal
Madame Tussauds has shown off its Beyoncé waxwork in Regent's Park - but why is the tourist attraction still pulling in the crowds?

Waxing lyrical

Madame Tussauds has shown off its Beyoncé waxwork in Regent's Park - but why is the tourist attraction still pulling in the crowds?
Texas forensic astronomer finally pinpoints the exact birth of impressionism

Revealed (to the minute)

The precise time when impressionism was born
From slow-roasted to sugar-cured: how to make the most of the British tomato season

Make the most of British tomatoes

The British crop is at its tastiest and most abundant. Sudi Pigott shares her favourite recipes