Total buys Engie's LNG business for $1.5 B
PARIS (Reuters) — Total said on Wednesday it has acquired the upstream LNG interests of French power and gas utility Engie for around $1.5 B, in a deal which is set to make it the world's second largest player in the LNG market, with a 10% share.
Total said the portfolio includes liquefaction plants, notably Engie's interest in the Cameron LNG project in the United States, long-term LNG sales and purchase agreements, an LNG tanker fleet as well as access to regasification capacities in Europe.
Total's Chief Executive Patrick Pouyanne told reporters in a call that the acquisition would give it a share of the markets in Europe and Asia, where Engie had some long-term LNG contracts.
"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 5% to 6% per year," he said.
The combination of the portfolios will allow Total to manage an overall volume of around 40 MMt of LNG per year by 2020, making it the second largest global player among oil majors with a worldwide market share of 10%, Pouyanne said, second behind rival Shell.
Total currently has a market share of about 6%.
"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," Pouyanne said.
The $1.5 B value of the deal includes debts and liabilities which meant Total's final cash payment could be lower once the transaction is completed by mid-2018, he said.
Under the agreement Total could make additional payments of up to $550 MM if oil markets improve in the coming years.
The companies confirmed in October that they were in talks over Engie's LNG business.
Engie, which is in a midst of a strategic restructuring that includes $17.39 B of asset sales, said separately that the transaction completes its move to withdraw from oil and gas exploration and production.
It added that the deal will reduce the group's debt by 1.4 B, not including the possible additional payments.
By Bate Felix; Additional reporting by Geert de Clercq; Editing by Leigh Thomas
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The New LNG Imperative
The shale gas boom established the US as the world’s leading natural gas producer and is responsible for billions of dollars of investments in the US gas processing industry. Since 2012, the US has witnessed unprecedented growth in new gas processing capacity and infrastructure. This rise is due to greater production of domestic shale gas, which is providing cheap, available feedstock to fuel the domestic gas processing, LNG and petrochemical industries. New gas processing projects include the construction of billions of cubic feet per day of new cryogenic and gas processing capacity, NGL fractionators, multi-billion-dollar pipeline infrastructure projects, and the development of millions of tons per year of new LNG export terminal construction. Attend this webcast to hear from Lee Nichols, Editor/Associate Publisher, Hydrocarbon Processing, Scott Allgood, Director-Data Services, Energy Web Atlas and Peregrine Bush, Senior Cartographic Editor, Petroleum Economist as they discuss the future of LNG and the application of Energy Web Atlas, a web-based GIS platform which allows users to track real-time information for every LNG project.
November 29, 2017 10am CST