The French energy giant divested its upstream assets in the liquefied natural gas segment, agreeing with its local competitor Total SA on an enterprise value of $1.49 billion. The announcement published on Wednesday adds Engie SA, in which the state holds more than a third of shares, will receive up to $550 million more, "in case of an improvement in the oil markets" over an undisclosed period, namely "the coming years."
The purchase, expected to be executed by mid-year, helps the target entity to "improve its risk profile," said chief executive Isabelle Kocher, who has been leading the efforts to shift focus to renewables. Patrick Pouyanne, head of Total, estimated the addition of liquefaction plants, long-term LNG contracts and a tanker fleet of ten vessels will boost managed volume to 40 million tons per year by 2020. The market share of 10% will make it the second-strongest company in the sector, he said, while Royal Dutch Shell Plc is number one.
Total is also entering the market in the United States, where it already pumps gas, with Engie's Cameron LNG project. The liquefaction capacity will be increased by 2.5 million tons a year to 23 million by 2020. The acquisition will bring 14 million tons per year in regasification capacity in Europe, increasing the overall volume to 18 million.
