Total makes $ 600 million bet on India gas, buys stake in Adani arm
ACQUISITION PLAN French firm agrees to buy a 37.4% stake in Adani Gas to expand its footprint
NEWDELHI/BENGALURU/SINGAPORE: French energy giant Total SA is spending $600 million to expand its presence in one of the world’s fastest growing natural gas markets.
Total agreed to purchase a 37.4% stake in India’s Adani Gas Ltd, a distributor of the fuel that is developing import terminals and a national chain of vehiclefilling outlets.
Total is the third foreign oil major to enter India’s gas sector after BP Plc and Shell, and it comes at a time when India is spending heavily to cut its carbon emissions.
The deal gives the world’s second-largest liquefied natural gas (LNG) player a footprint in a market where annual LNG demand will hit 28 million tonnes by 2023, making it the fourth biggest importer of the fuel, according to Bloombergnef.
Total i s t he l atest energy major seeking to expand its presence in India, where population growth and economic development are luring some of the biggest oil and gas producers.
In August, Reliance Industries Ltd said Saudi Arabian Oil Co. may buy 20% of its oil-tochemical business at an enterprise value of $75 billion.
“Energy needs in India are immense,” Total chief executive officer (CEO) Patrick Pouyanné said in a statement.
“The natural gas market in India will have a strong growth and is an attractive outlet.”
The acquisition is the latest in a string of Total investments meant to beef up its presence in LNG. The French giant agreed to take over the Mozambique LNG project earlier this year as part of a deal for Anadarko Petroleum Corp.’s assets in Africa.
T h e c o mp a n y h a s a l s o
TOTAL WILL ACQUIRE UP TO 25.2% IN ADANI GAS FROM PUBLIC SHAREHOLDERS AT ₹149.63 PER SHARE, AN 8.7% PREMIUM TO THE STOCK’S LAST CLOSE
recently absorbed Engie SA’S upstream assets, boosted its investment in Tellurian Inc. and its Us-based Driftwood LNG venture, and is planning to s a nct i o n a new g a s e xport project in Papua New Guinea.
“Total’s investment in Adani is undoubtedly a show of faith in India’s gas demand growth,” Nicholas Browne, a Singaporebased analyst at Wood Mackenzie, said in an email.
Gas demand will double to reach 75 billion cubic meters by 2030, equivalent to 7% of the country’s energy mix, with LNG meeti ng a bout 5 0 % o f t hi s demand growth, according to the consultant.
Adani, whose shares jumped as much as 18% and headed for the highest close since July, is developing the Mundra and Dhamra LNG import terminals in India.
It plans to expand its distribution network in the next decade to about 6 million homes and 1,500 retail outlets for natural gas vehicles.
Total said in a statement that the acquisition will cost about $600 million taking into account its divestment in another Indian LNG terminal earlier this year.
Total will buy up to 25.2% in Adani Gas from public shareholders at ₹149.63 per share, representing an 8.7% premium to the stock’s last close and valuing the stake at ₹4,147 crore.
It will also buy another 12.2% stake from the Adani family at an undisclosed price, according to stock exchange filings.
After the deal, the Adani family and Total will each hold 37.4% stake in Adani Gas, while public shareholders will own the remaining 25.2%.
Total and Adani plan to establish a joint venture to market LNG in India and Bangladesh.
Speaking later at a conference in New Delhi, Pouyanné said the deal will take 6 months to complete, adding that the e nergy major was l ooking to capture a substantial part of the Indian gas market with Adani.
Total was also in discussions with partners including Adani for partnership in renewable energy, he said at the India Energy Forum by CERAWEEK.