Total to buy stake in India’s Adani Gas for $600 million

Total, the world’s second-largest LNG player, has expanded its partnership with India’s energy and infrastructure conglomerate Adani Group for the development of the Indian natural gas market. 

The Indian natural gas market is currently only seven percent of the country’s energy consumption but has grown over the last three years by more than five percent per annum, supported by an active policy of the Indian Government that aims to diversify its energy mix and develop domestic use of gas in cities and as fuel for vehicles. 

According to Total, India has set an ambitious target of increasing the share of natural gas in its energy mix to 15 percent by 2030. 

The 50-50 partnership between Adani and Total includes several assets across the gas value chain, notably two imports and regasification LNG terminals: Dhamra in East India and potentially Mundra in the West, as well as Adani Gas Limited, one of the four main distributors of city gas in India of which Adani holds 74.8 percent and of which Total will acquire 37.4 percent. 

Adani Gas Limited aims to expand its distribution of gas in the next 10 years through its 38 concessions covering 7.5 percent of the Indian population and market natural gas to industrial, commercial and domestic customers, targeting six million homes as well as through 1,500 retail outlets of natural gas for vehicles. 

Total said that the two companies would also establish a joint venture to market LNG in India and Bangladesh. 

Patrick Pouyannéchairman and CEO of Total, said: “Energy needs in India are immense and the Indian energy mix is key to the climate change challenge. Firmly investing to develop the use of natural gas in India is in line with Total’s ambition to become the responsible energy major. Adani will bring its knowledge of the local market and its expertise in the infrastructure and energy sectors.

The company added that, in order to reach a 37.4 percent shareholding in Adani Gas Limited, it will initially launch a tender offer to public shareholders to acquire up to 25.2 percent of equity shares before buying the remaining shares from Adani. 

Taking into account the divestiture of Total’s interest in Hazira terminal early 2019, the establishment of this partnership on gas in India represents a net acquisition cost for Total of approximately $600 million over 2019-2020. 

It is worth reminding that the two companies signed an initial agreement to jointly develop energy business in the Indian market, including LNG, back in October 2018.