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Total to acquire Engie’s upstream and midstream LNG assets for $1.5bn

Oil giant Total has signed an agreement to acquire French utility Engie’s upstream and midstream LNG assets in the US, for $1.49bn.

Under the terms of the deal, Total will acquire 16.6% stake in the Cameron LNG liquefaction plant with 3 trains currently under construction in Louisiana, US as well as 5% stake in the first train of the Idku LNG project in Egypt.

The firm said it will also acquire a portfolio of long-term LNG purchase and sale contracts, which would boost its overall portfolio to 28 million tons per annum (MTPA) by 2020.

Additionally, Total will acquire access to regasification capacities of 14 MTPA in Europe as well as a fleet of 10 LNG tankers.

Total said that it would pay an additional $550m to Engie, a unit of GDF Suez, based on future oil market developments.

Total chairman and CEO Patrick Pouyanné said: “The acquisition of Engie’s upstream LNG business enables Total to accelerate the implementation of its strategy to integrate along the full gas value chain, in an LNG market growing strongly at 5% to 6% per year.

“The combination of these two complementary portfolios will allow the Group to manage an overall volume of around 40 million tons of LNG per year by 2020, making Total the second largest global player among the majors with a worldwide market share of 10%.

“With the equity stake in the Cameron LNG project, Total will also become an integrated player in the US LNG market, where the Group is already a gas producer.”

The sale is part of Engie’s strategy to reduce its exposure to commodity prices and move away from upstream oil and gas activities.

Engie CEO Isabelle Kocher said: “Engie is nonetheless accelerating its development in its LNG downstream activities, notably in the regasification domain and the supply of LNG to its end customers.”

Scheduled to be completed in 2018, the transaction is subject to approvals by the relevant regulatory authorities, among others.

Separately, Engie has signed an agreement to become Total's preferred green gases supplier.

Image: The Cameron LNG project in the US. Photo: courtesy of PRNewsFoto/GDF SUEZ.