Total SA is spending $600 million to spread its presence in one of the world’s rapid flourishing natural gas markets. Total settled to purchase a 37.4% stake in India’s Adani Gas Ltd., a distributor of the fuel that is advancing import terminals and a national chain of vehicle-filling channels. The contract gives the world’s second-largest LNG player a imprint in a market where annual LNG claim will hit 28 million tons by 2023, making it the fourth biggest importer of the fuel.
Total is probing to expand its existence in India, where community growth and economic development are luring some of the gigantic oil and gas producers. “Energy needs in India are infinite,” Total Chief Executive Officer Patrick Pouyanne said in a statement. “The natural gas market in India will have a strong growth and is an interesting outlet.”
The acquisition is the latest in a string of Total investments meant to beef up its existence in LNG. The French giant admitted to take over the Mozambique LNG project earlier this year as part of a deal for Anadarko Petroleum Corp.’s assets in Africa.
“Total’s investment in Adani is doubtlessly a show of faith in India’s gas demand growth,” Nicholas Browne, a Singapore-based analyst at Wood Mackenzie, said in an email. Gas requirement will double to reach 75 billion cubic meters by 2030, equivalent to 7% of the country’s energy mix, with LNG meeting about 50% of this 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 broaden its trading network in the next decade to about 6 million homes and 1,500 retail outlets for natural gas vehicles.
Total said in a report that the acquisition will cost about $600 million taking into account its divestment in another Indian LNG terminal earlier this year.