By November 22, 2017 0 Comments Read More →

The LNG Bandwagon Keeps Growing

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When Shell purchased BG for US$53 billion in 2016 to become the world ‘s largest LNG company, it capped off a change in the way the LNG world worked. LNG used to be more of a producer-buyer relationship, with firms like Petronas, Pertamina and Qatargas cutting deals directly with buyers in Japan and South Korea. With a tidal wave of LNG swamping the industry, the opportunity of increased trading arose as LNG trading hubs like Singapore developed. With access to BG ‘s vast LNG portfolio and its own, Shell was in prime position to take advantage of a nimbler, more flexible LNG environment.

With the purchase of French power utility Engie’s LNG assets for US$1.5 billion, Total now leaps to second place among the world’s (publicly-traded) LNG sellers. While a small drop compared to the BG purchase, it caps off a string of LNG investments for Total which include the South Pars in Iran and its stake in rising LNG star Papua New Guinea. From Engie, Total will receive interest in the Cameron LNG project in the US, a 5% stake in the Idku LNG project in Egypt, a 10-strong LNG tanker fleet and access to 14 mtpa of regasification capacities in Europe, with Engie keeping its downstream gas activities. It will expand its portfolio of LNG sales-and-purchase agreements, with new output coming from Algeria, Nigeria, Norway, Russia, Qatar and the US. This puts on course for Total to achieve LNG volumes of 40 million tons per year by 2020, from 23 million tons today, making it a more well-rounded and competitive LNG player with access to some 10% of the global market. Total will also become Engie’s priority gas supplier for 10 years, ensuring captive demand for an extended period, given how closely French companies work with each other…

 

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