Total S.A. announces signing definitive agreement for acquisition of 37.4% interest in Adani Gas, to expand in natural gas and fuel retail activities in India

Paris: Total S.A., a global integrated energy producer and provider, is acquiring a significant minority stake in Adani Gas, a fuel distributor that’s developing import terminals and a national chain of vehicle-filling outlets. With this collaboration, both the companies will be developing multi energy offers in the Indian energy market. This cooperation includes Liquefied Natural Gas (LNG) and Fuel Retail. This collaboration will foster the development of the India natural gas market. The partnership has set a target of developing various regasification terminals including Dhamra LNG. This partnership will take India closer to the vision of healthier energy mix.

Chairman & CEO of Total S.A. stated that, “India’s energy consumption will grow fastest among all major economies in the world over the next decade. The partnership between Total S.A. and the Adani Group illustrates our joint commitment to assisting India to diversify its energy mix and to ensure a supply of reliable, affordable and clean energy to consumers. We are thrilled to build this broad partnership with the Adani Group, benefitting from its in-depth knowledge of the Indian energy market, as well as its access to infrastructures through a significant footprint in several of the country’s key ports.”

CEO of Adani Group said that, “I am delighted to partner with Total S.A., one of the biggest energy companies in the world. The collaboration enables us to associate with Total’s century-old legacy, global presence, scale and unparalleled go-to-market expertise. The global synergy between the two groups presents widespread benefits and long-term value for the economy and the people of India. We are looking forward to this opportunity to touch millions of lives by leveraging our collective footprints and domain expertise in the energy sector. It also enables the Adani Group to be part of the country’s vision in adopting cleaner energy.”

According to TechSci Research, acquisitions have always been Total’s key growth strategies. Total S.A. has recently made several investments to increase its presence in the LNG sector. The company agreed to take over a Mozambique LNG project earlier this year as part of a deal for Anadarko Petroleum Corp.’s assets in Africa. Total’s sustained focus on expanding its business through strategic acquisitions and investments will drive growth over the long run. Further, the Adani Group stake buyout will help Total S.A. fortify its competitive edge against rivals like Exxon Mobil, Shell, OMV, among others.

This proposed acquisition will be the largest foreign direct investment in India’s city gas distribution industry, with the deal giving Total S.A. joint control of Adani Gas. Both the companies will be making significant investments over the years across the businesses to develop India’s gas infrastructure, distribution and marketing businesses.

According to the report published by TechSci Research, “Global LNG Market Demand & Supply Analysis, By Region (Asia-Pacific, Europe, Middle East & Africa, South America and North America), By Country, By LNG Terminal, Competition Forecast and Opportunities, 2011-2025”, the global LNG supply market is expected to exhibit a CAGR of over 5% during 2016-2025, on account of rising demand for cleaner fuels, oversupply of LNG due to liquefaction capacity additions in Australia, US and Papua New Guinea, and declining prices of LNG over the last few years. In 2015, the global LNG export market was dominated by Qatar and Australia, due to huge natural gas reserves and large liquefication capacities in these countries. Increase in spot market purchase is expected to keep LNG prices under check in Asia-Pacific and Europe.

According to another TechSci Research report, “India LNG Market Forecast and Opportunities, 2025”, the total opportunity for RLNG in India is projected to increase from an estimated 52.34 mmscmd in 2016 to 305.10 mmscmd by 2025, registering a CAGR of more than 21% during 2016 – 2025. Upcoming LNG terminal projects, surging demand for natural gas in India and cost-effectiveness of LNG as compared to other alternative fuels are among the major factors anticipated to positively influence the country’s LNG market scenario over the next ten years. Government has also announced revised guidelines in “Gas Allocation Policy” to prioritize natural gas supply to various end-user segments that include City Gas Distribution for households and transport sector, fertilizers sectors (urea plant), power plants and industrial sector. In addition, emergence of SSLNG market is opening new opportunities for the industry. Other policies like E-bid RLNG are also expected to play a crucial role for supplying imported RLNG to power plants and fertilizer industry over the course of next ten years.