Total Closes Engie LNG Deal

French Total has closed its purchase of Engie’s portfolio of upstream liquefied natural gas (LNG) assets for an overall enterprise value of $1.5bn, it said July 13. Depending on the strength of the oil price, it may have to pay a further $550mn. 

The portfolio, which puts it second only to Anglo-Dutch major Shell, includes participating interests in liquefaction plants, notably the interest in the Cameron LNG project in the US, long term LNG sales and purchase agreements, an LNG tanker fleet as well as access to regasification capacities in Europe. 

“Acquiring Engie’s LNG business is a real step change for Total allowing us to leverage size and flexibility in the fast growing and increasingly commoditised LNG market. This transaction makes Total the second largest global LNG player among the majors with a worldwide market share of 10% and the group will manage an overall LNG portfolio of around 40mn metric tons/year by 2020. It also helps us to build a position in the US LNG market, with the 16.6% stake in the Cameron LNG project,” said Total CEO Patrick Pouyanne.

Engie's divestment from upstream LNG is part of its decarbonisation strategy, but several experts have remarked that Total got a bargain especially on the valuation of Engie's fleet of ten LNG carriers even allowing for the deal being priced during last year's downturn in the shipping market. 

Total’s LNG portfolio in 2020 will thus comprise:

• equity LNG 40mn mt/year.
• a liquefaction capacity portfolio of 23mn mt/year, well distributed among the major LNG production areas: Middle East, Australia, Russia and the US.
• a worldwide LNG trading contracts portfolio of 28mn mt/year to supply each LNG market with competitive and flexible resources.
• European regasification capacities of 18mn mt/yr.
• 18 LNG carriers, of which two are floating storage and regasification units.

Shell consolidated its position as the oil major with the largest LNG portfolio, when it completed its $54bn acquisition of BG Group in February 2016. 

Separately, Irish explorer Providence Resources said earlier on July 13 that it had completed its farmout of 35% equity in, and the transfer of operatorship of, Irish offshore licence FEL 2/14, to Total - following a recent Irish government approval. The planned transaction was first announced in June 2017. Remaining stakes in the licence are now Cairn 30%, Providence 28% and Danish independent Sosina Exploration 7%. FEL 2/14 contains the undrilled Diablo prospect and the drilled Druid and Drombeg prospects.