Total Buys Engie's Upstream LNG Assets
Total has signed an agreement with Engie to acquire its portfolio of upstream LNG assets for $1.49 billion. The portfolio includes participating interests in liquefaction plants, long term LNG sales and purchase agreements, an LNG tanker fleet and access to regasification capacity in Europe. Additional payments of up to $550 million could be payable by Total in case of an improvement in the oil markets in the coming years.
The transaction will bring to Total 2.5 MTPA of liquefaction capacity, bringing its capacity to 23 MTPA by 2020. This includes a 16.6 percent equity stake in the Cameron LNG liquefaction plant with three trains currently under construction in Louisiana and the potential to expand by adding two further trains. It also brings a five percent equity stake in the first train of the Idku LNG project in Egypt.
A portfolio of long-term LNG purchase and sale contracts will increase Total's overall portfolio to 28 MTPA by 2020, with supply from Algeria, Nigeria, Norway, Russia, Qatar and the U.S., and outlets balanced between Europe and Asia.
Access to regasification capacities of 14 MTPA in Europe will be combined with Total's existing four MTPA, and a fleet of 10 LNG tankers will be consolidated with Total's three LNG carriers.
The acquisition 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 percent per year, says Patrick Pouyanné, Chairman & Chief Executive Officer of Total. “The combination of these two complementary portfolios will allow the group to manage an overall volume of around 40 million tons of LNG per year by 2020, making Total the second largest global player among the majors with a worldwide market share of 10 percent.”
The transaction is expected to close in 2018 when Total will take over around 180 Engie employees involved in LNG activities.
Engie will keep its downstream business and is shifting focus to three key business areas: low carbon power generation, infrastructure, notably gas, and integrated downstream customer solutions. The company says it remains committed to its retail sales, its GTT subsidiary and its regasification terminals in France, the United States and Chile.
In parallel, Engie is accelerating its development in downstream gas activities and has announced the creation of a new entity responsible for the development of renewable hydrogen, which Engie sees as an emerging source of energy. Total and Engie have agreed to cooperate to promote the use of biogas and renewable hydrogen, with Engie becoming Total's priority supplier in this field for an initial 10-year period.