Total has signed an agreement with Engie to acquire its portfolio of upstream liquefied natural gas (LNG) assets, which is set to make it the second largest global LNG player
The portfolio, valued at US$1.49bnm, includes participating interests in liquefaction plants, amongst them a 16.6 per cent equity stake in the Cameron LNG liquefaction plant in the USA and five per cent equity stake in the first train of the Idku LNG project in Egypt. It also includes long term LNG sales and purchase agreements, enabling the Group in increase its overall portfolio to 28 MTPA by 2020, with a diversified supply from Algeria, Nigeria, Norway, Russia, Qatar and the USA, and outlets balanced between Europe and Asia. Also part of the deal are a 10-strong LNG tanker fleet as well as access to regasification capacities in Europe. Overall, combining its interests in liquefaction plants and its portfolio of third party supply contracts, the Group will manage a global volume of nearly 40 MTPA.
“The acquisition of Engie’s upstream LNG business enables Total to accelerate the implementation of its strategy to integrate along the full gas value chain, in an LNG market growing strongly at five to six per cent per year,” said Patrick Pouyanné, chairman and CEO of Total. “The combination of these two complementary portfolios will allow the Group to manage an overall volume of around 40 million tonnes of LNG per year by 2020, making Total the second largest global player among the majors with a worldwide market share of 10 per cent. With the equity stake in the Cameron LNG project, Total will also become an integrated player in the US LNG market, where the Group is already a gas producer.”
The proposed transaction is subject to the applicable legally required consultation and notification processes with employee representatives, as well as approvals by the relevant regulatory authorities and partners on certain contracts. The transaction is expected to close by mid 2018 and will have an effective date of 1 January 2018.
The deal advances Total’s aim to reduce the carbon-intensity of its fossil fuel mix, a central plank of its climate strategy, and increase the proportion of gas in its hydrocarbons mix to 60 per cent by 2035.
Total and Engie also agreed to cooperate to promote the use of biogas and renewable hydrogen, with Engie becoming Total's priority supplier in this field.