French oil and gas company Total has signed an agreement to acquire Engie’s portfolio of upstream liquefied natural gas (LNG) assets for an aggregate cost of $1.49bn.
Under the agreement, Total will acquire Engie’s participating interests in liquefaction plants, including the interest in the Cameron LNG project in the US, as well as long-term LNG sales and purchase agreements.
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The portfolio also comprises an LNG tanker fleet and access to regasification capacities in Europe.
Conditional on improvement in the oil markets in the coming years, Total is required to make additional payments of up to $550m.
Total chairman and CEO Patrick Pouyanné 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%.
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By GlobalData“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 acquisition is expected to add 2.5 million tonnes per annum (mtpa) of liquefaction capacity, thereby enabling Total to increase its portfolio to 23mtpa by 2020.
Total is set to have a 16.6% equity stake in the Cameron LNG liquefaction plant, where three trains are currently under construction in Louisiana, with plans to add two additional trains.
The company is also expected to hold a 5% equity stake in the first train of the Idku LNG project in Egypt.
Furthermore, the transaction enables the company to add a fleet of ten LNG tankers to its existing portfolio of three carriers.
Subject to certain conditions, including approvals by regulatory authorities and partners, the transaction is anticipated to be completed by mid-2018.
