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Total to acquire Engie’s upstream LNG assets

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Hydrocarbon Engineering,

Total has announced that it has reached an agreement with Engie to acquire its portfolio of upstream LNG assets for an overall enterprise value of US$1.49 billion.

This portfolio includes participating interests in liquefaction plants, including the Cameron LNG project in the US, long-term LNG sales and purchase agreements (SPAs), an LNG tanker fleet, and access to regasification capacities in Europe.

Total confirmed that it could be liable to pay a further US$550 million in the event of an improvement in the oil markets in the coming years.

Patrick Pouyanné, Chairman and Chief Executive Officer (CEO) 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 tpy of LNG by 2020, making Total the second largest global player among the majors with a worldwide market share of 10%”, commented. “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 transaction is expected to close by mid 2018 and will have an effective date of 1st January 2018, subject to the applicable legally required consultation and notification processes with employee representatives, as well as approvals by the relevant regulatory authorities and partners on certain contracts.

Following the transaction, Total will take over the teams in charge of the LNG activities at Engie, which represents around 180 employees.

In parallel with this transaction, Total and Engie have agreed to cooperate to promote the use of biogas and renewable hydrogen. Engie will become Total's priority supplier in this field.

In a separate statement, Engie confirmed that it will keep its downstream activities. The company’s CEO, Isabelle Kocher, 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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