Published On: Sun, Nov 12th, 2017

Oil and gas news : Total to acquire Engie’s LNG business for $1.5 billion

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Energy Industry News : French oil and gas company Total has agreed to acquire electric and gas utility Engie’s portfolio of upstream and midstream liquefied natural gas (LNG) assets for a total of $1.49 billion.

The transaction marks the exit of Engie from the upstream oil and gas business while allowing Total to become the second largest player in the global LNG market by 2020.

Engie had earlier revealed that it was looking to divest its LNG business as part of a restructuring strategy.

The portfolio it is divesting includes participating stakes across liquefaction plants. This includes the 16.6% of stake held in the Cameron LNG project in the US to go along with LNG tanker fleet, long-term LNG sales and purchase agreements and access to 14 MTPA of regasification capacities across Europe.

With its entry into the Cameron LNG project, Total is set to transform as an integrated player in the US LNG market, where it is currently present as a gas producer.

As per the deal, Total may have to pay up to $550 million subject to an improvement in the oil markets in the near future.

Total headquarters in Paris

Total headquarters in Paris. Photo courtesy of I Tangopaso (talk))/Wikipedia.org.

Patrick Pouyanné, the Chairman & Chief Executive Officer of Total, said:  “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.

“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%.”

Total and Engie have come to an understanding to cooperate in promoting the use of biogas and renewable hydrogen. In this connection, Engie will become the priority supplier of Total in this field.

Subject to certain closing conditions and approvals, the Total Engie deal is likely to be completed in mid-2018.

After the transaction is closed, Total will be absorbing the teams looking after the Engie LNG activities, which includes about 180 employees.

Isabelle Kocher, the Chief Executive Officer of Engie said: “This intended transaction demonstrates once again ENGIE’s ability to deliver on its transformation plan and to improve its risk profile by reducing its exposure to commodity prices. Total is the best placed to secure the future development of liquefaction, shipping and LNG trading employees and activities.

“ENGIE is nonetheless accelerating its development in its LNG downstream activities, notably in the regasification domain and the supply of LNG to its end customers. Furthermore, ENGIE is convinced that green gases are a key element to the energy revolution and further materialises its lead in this area by becoming Total’s preferred supplier.”

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