French integrated oil and gas firm Total has completed the acquisition of French utility Engie’s upstream liquefied natural gas (LNG) assets in a $1.5bn deal.
As per the deal signed in November last year, Total will make additional payments of up to $550m in the event of an improvement in the oil markets in the coming years.
Total chairman and CEO Patrick Pouyanné said: “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 commoditized 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 40Mt per 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.”
The Engie’s assets purchased by Total include: interests 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.
In 2017, Total announced that it will take over Engie’s teams in charge of the upstream LNG activities, which represents around 180 employees.
By 2020, Total will have a total volume of LNG managed of 40Mt/y, and a liquefaction capacity portfolio of 23Mt/y.
The company will also have a fleet of 18 LNG carriers, of which two will be floating storage and regasification units (FSRUs).
Engie earlier said that the sale is part of its strategy to reduce its exposure to commodity prices and move away from upstream oil and gas activities.
Total chairman and CEO Patrick Pouyanné earlier said the deal allows the firm 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.
Pouyanné noted: “The combination of these two complementary portfolios will allow the Group to manage an overall volume of around 40 million tons of LNG per year by 2020, making Total the second largest global player among the majors with a worldwide market share of 10%.”