Firms are reshuffling their portfolios in favour of gas ahead of the looming energy inflection point.
Although gas may not dominate energy supply for another 10-20 years or more, the industry is looking over the horizon. Following on from a series of liquefied-natural-gas-driven M&As that included ExxonMobil’s acquisition of a 25% stake in Mozambique Area 4 and Shell’s purchase of Chevron’s position in Trinidad, Total and others have maintained the momentum.
Total’s $1.5bn acquisition of Engie’s portfolio of upstream LNG assets, which closed in July, says a lot about where things are heading. Total bought from Engie not only participating interests in liquefaction plants-most importantly the interest in the Cameron project that gives the French giant a foothold in the US, but also regasification capacity in Europe and, to boot, an LNG tanker fleet.
Thus, Total has catapulted itself into the big league. Overnight the company becomes the second-biggest LNG player among the majors, with a worldwide market share of 10% and an overall LNG supply portfolio of almost 40m tonnes a year through equity liquefaction and third-party supply contracts. The long-term purchase and sale contract element of this portfolio will rise to 28mn t/yr by 2020. The combined firm will have liquefaction capacity of 23m t/y distributed globally and regasification capacity, centred on Europe, of 18m t/y.