Paolo Scaroni, CEO, Eni
The Way Ahead Interview invites senior figures that shape our E&P industry to share their wisdom, experience, and deep knowledge with the young E&P professional community. Each interview is an open conversation that explores the careers, advice, and vision of these successful individuals. It is hoped that these interviews will help young E&P professionals learn how to nurture their own personal skills, understand the nature and challenges of our industry, and grasp the technologies, developments, and issues that are key to creating our industry’s future.
For this interview, we travel to Eni’s headquarters in San Donato, Italy. San Donato is a green and prosperous small town on the outskirts of Milan. The town and Eni both owe their existence to the vision of Eni’s founder, Enrico Mattei, who led the company from being a national player to international expansion in booming post-war Italy.
In San Donato, spring is blooming, and the air is vibrant with growth and energy. Paolo Scaroni, Chief Executive Officer of Eni, fits this character, blended with the leadership, charisma, and vision that show Mattei’s spirit is alive.
Please join us in a candid discussion with Scaroni. This interview by Thomas Bruni captures Scaroni’s charm, integrity, and personal leadership lessons from his experiences leading successful organizations. Enjoy! —John MacArthur, TWA Interview Editor, Thomas Bruni, TWA Editor-in-Chief
Mr. Scaroni, you are CEO of Eni, one of the largest integrated oil and gas companies, and previously you held the same position with Enel, a prominent actor in the European power market. You seem to like the energy sector, or is it the latter that will not let you go?
I am thrilled to be part of an industry that is playing an increasingly central role at all levels of our society, from the political arena—I think of the debates European policymakers have been engaged in during this past winter following the fluctuations in the supply of Russian gas—to the everyday life of each household, and I am proud to be leading one of the world’s key players of our industry. No, I am definitely not held hostage by the energy sector; quite the opposite in fact. I feel lucky and privileged.
Your career has been very diverse. As a fresh economics graduate, your first job was in the oil business. Later, you joined a consulting company. A high-technology material company followed. What do you carry with you of these early experiences and of those that followed, and how have they helped you shape your perspectives, ideas, and values?
I was 22 when I graduated in economics. My first job was with the Italian subsidiary of Chevron, as retail representative for 55 gas stations. The job proved to be an invaluable learning and training opportunity, encompassing some of the key elements of any business, irrespective of its nature: customer relations, procurement management, and, above all, the income statement. I still remember I had one per gas station, which was quite remarkable considering that we were at the beginning of the 1970s.
However, even if I was lucky enough to be quickly promoted to retail representative for all 3,000 of Chevron’s gas stations in Italy, I never stopped looking for new opportunities, and that is how I successfully applied for an MBA degree at Columbia Business School in New York City. I resigned from my job, sold my car, and with my savings I embarked on the new adventure. When I got back, I joined McKinsey as a consultant. Later, I sent my curriculum vitae to Saint Gobain Italy, whose existence I was aware of only because its headquarters were located in Milan just around the corner from my previous employer, Chevron. It proved to be a pivotal move in my career. So, while luck and chance may always play a part in one’s life, I guess the underlying message is: Do not sit still; be proactive, welcome challenges, and hunt for opportunities.
What advice would you give to professionals in the early stages of their E&P careers?
Experience has taught me that a hands-on approach has the potential to unveil the hidden secrets of any job or business, which is an essential prerequisite for professional growth. My advice is to try to move into operations, with responsibilities including the coordination of a team and the financials involved. Once one has mastered the basics of the business and has gotten a feel for what and where the opportunities and risks are, it is easier to move on and to be successful at higher-level management positions.
Who helped you the most in your career, and what lessons did you learn from your mentors?
As I guess it is the case for most of us, many people have inspired me during the course of my career. One person, however, deserves my special gratitude and appreciation for his contribution to my personal and professional development. That person is Xavier de Villepin, the General Delegate of Saint Gobain Italy when I joined the company in 1973, and the person who actually hired me. Xavier de Villepin was bold enough to believe in a young MBA graduate with little work experience and to appoint me as Treasurer of the Italian businesses. Only 1 year later, Xavier de Villepin charged me with a very remarkable operational job as CEO of the Saint Gobain glass fibers company in Italy. The company had 1,700 employees, and I was just 27.
Looking back, I can see how bold those decisions were, even more so considering they were taken over 3 decades ago when seniority was a prerequisite and everyone’s career progress was more or less in line with one’s biological clock. The lesson I take with me is to nurture, value, and invest in young professionals. Not only do they hold the key to the successes of tomorrow, but they have the talents, enthusiasm, and creativity to fuel the growth and expansion of today.
What are the key technology challenges you see on the horizon for the E&P industry? How is Eni preparing?
Few industries out there are as old and still as technology-driven as the oil industry. Yet, over 140 years after Drake’s well, the first oil well in history drilled in the middle of a quiet farm countryside in northwestern Pennsylvania in 1859, still only one-third of the world’s hydrocarbon resources are considered economically recoverable. This means that the technology bar needs to be progressively raised if we want to—and we do—gain access to the “pot of gold.”
Not surprisingly, exploration and production environments are becoming ever more challenging. Exploration waters are getting deeper and operating conditions more prohibitive. Eni sees technology and the associated human capital as a source of competitive edge that we want to leverage on. We stimulate the virtual learning circle through solid training programs. Training is a zero-sum game: What we are willing to invest today in our young resources will pay off its dividends tomorrow.
We have been driving technological progress forward by championing a number of innovative technologies. I will mention a couple: lean-profile drilling, which allows for significant cost and time savings while reducing environmental impact by minimizing the volume of rock displaced. And 3D common-reflection-surface seismic produces superior-quality imaging, diminishing the uncertainties associated with the definition of geological targets.
Technology will allow us to improve recovery from existing fields as well as to push the envelope to reach new frontiers like unconventional hydrocarbons—oil sands, to name one. In this context, the giant Kashagan field located in the Kazakh waters of the Caspian Sea deserves a special mention. We are proud to be the operator for the development and production of the largest oil discovery in the last 30 years, as well as what is considered to be the most technologically challenging project currently being undertaken in the industry. In conclusion, Eni recognizes technology as the key to unlock the value in our industry, and we are acting on these words.
The theme of this issue of The Way Ahead is “risky business.” Our everyday lives are permeated with risk. Each time we make a decision, we implicitly accept some level of risk. How do you cope with risk?
Our industry is physiologically exposed to considerable risk levels—the downside of wrong or unfortunate decisions can be catastrophic and cost millions. By definition, risk cannot be avoided, but it can and should be managed—“gut feel” can be a last-resort option, certainly not the common way to go. What I advocate is a solid decision-making process underpinned by a holistic approach. It is only by factoring in all of the information that is available to us that we can be in a position to take the best shot at it and try to reap the full rewards our industry can offer.
That is where I come from when I question the validity of return on average capital employed as the sole or preferred yardstick for evaluating the performance of a company or a single project. It would be equivalent to assessing a football team solely on the basis of the goals scored. What about the goals conceived?
You have a very busy professional life. How do you relax and maintain a healthy work/life balance?
I may not be the ideal person to be asked this question. I would not want to sound commonplace, but work is fun, and I enjoy every second of it, so there is no need to resort to any extravagant relaxation escape. However, as I wrote in my book Professione Manager, the sine qua non condition for a healthy professional life is a serene family able to support you and ease the tensions that work may sometimes produce. When I do take breaks, I know I have a wonderful and loving family waiting for me at home.
What lessons can you share about leadership? What ingredients are there in your recipe for success?
Success is a byproduct of, among other root causes, isolated facts and circumstances. In this perspective, the idea of setting out universal rules that should guarantee one’s success irrespective of the “boundary conditions” is a mere illusion.
Leadership is somewhat different. While leaders and their styles have historically been as different as it gets, some common and more-desirable traits have been singled out. I will share with you a valuable lesson that my mentor Xavier de Villepin gave me: If you want to be a good boss and fine leader, remember that your job is to act in such a way that when a member of your team meets you, he/she should leave your office feeling more valued and motivated than when he/she came in. Setting the direction to go may not be enough. The hurdles and challenges of our industry call for a focused plan as well as for the will to execute it. A leader should be able to inspire and disseminate motivation to the team.
Paolo Scaroni was born in Vicenza, Italy, in 1946. He became Chief Executive Officer (CEO) of Eni in May 2005. Scaroni earned a degree in economics from Milan’s Bocconi U. and, after working for Chevron for 3 years, earned an MBA degree from Columbia Business School in New York City. For a year following business school, he was an associate at McKinsey & Co. From 1973 until 1985, he held a series of positions with Saint Gobain, culminating with his appointment as President of the Saint Gobain flat glass division. In 1985, Scaroni became CEO of Techint. During his time at Techint, he also was Vice President of Falck and Executive Vice President of SIV, a joint venture between Techint and Pilkington plc. He joined Pilkington in 1996 and was group CEO until May 2002. From June 2002 until accepting his current position, he was CEO of Enel, Italy’s leading electricity utility. Scaroni is a member of the board of Il Sole 24 Ore and of Teatro alla Scala. He is Chairman of Alliance Unichem plc as well as a member of the board of ABN AMRO Bank N.V. and the Columbia Business School.
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07 December 2018