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Total Takes Over Toshiba’s U.S. LNG Portfolio

Freeport LNG

By MarEx 2019-06-02 16:35:59

Total has signed an agreement with Toshiba to take over its LNG portfolio. The deal includes a 20-year tolling agreement for 2.2 million tonnes per annum (Mtpa) of LNG from Freeport LNG train 3 in Texas and the corresponding gas transportation agreements on the pipelines feeding the terminal. Train 3 of the Freeport LNG plant is expected to start commercial operations by Q2 2020.

Under the transaction, Total will acquire all the shares of Toshiba America LNG corporation for $15 million (paid by Total to Toshiba) and will be assigned all contracts related to their LNG business by Toshiba Energy Systems and Solutions Corp. for $815 million (paid by Toshiba to Total). Total will therefore receive $800 million from Toshiba.

“Adding 2.2Mtpa of LNG to our existing positions in the U.S., in particular Cameron LNG, will enable optimizations of the supply and operations of these LNG sources,” said Philippe Sauquet, President Gas, Renewables and Power at Total. Already an integrated player in the U.S. gas market, Total is set to become one of the leading U.S. LNG exporters by 2020 with a 7Mtpa portfolio.

The transaction is expected to close by the end of 2019.

Last month, the U.S. Department of Energy (DOE) approved additional exports from the Freeport LNG Terminal. The first liquefaction train is expected to begin commercial exports later this year. 

U.S. LNG export capacity, currently at five billion cubic feet per day, is set to double by the end of 2020. The U.S. Energy Information Administration expects a continued increase in domestic natural gas production, with an average dry natural gas production rate of 90.3 Bcf/d in 2019 and 92.2 Bcf/d in 2020, both new records.

Total is the second-largest private global LNG player, with an overall LNG portfolio of around 40 Mtpa by 2020 and a worldwide market share of 10 percent. Through its stakes in liquefaction plants located in Qatar, Nigeria, Russia, Norway, Oman, Egypt, the United Arab Emirates, the United States, Australia, Angola and Yemen, the group sells LNG in all global markets.