Partnership to accelerate projects
Adani Group and TOTAL are to invest US$1 billion through definitive agreements to deepen their existing partnership and commitment for developing multi-energy offerings to the Indian energy market.
City Gas Distribution is a natural extension of the plans of both partners to invest in infrastructure and assets worth over US$1 billion, which span Liquefied Natural Gas (LNG) infrastructure and marketing and fuel retail business, announced in October 2018.
The agreements were signed in Ahmedabad on 14 Oct 2019.
This demonstrates both partners’ commitment to this important partnership and confidence in Adani Gas as the leading gas distribution player and commitment to the Government’s vision to provide benefits of piped natural gas and CNG to 70% populations of the country.
Total will purchase 37.4% shares in Adani Gas Limited through a tender offer to public shareholders to acquire up to 25.2% shares subject to applicable regulations and purchase the residual shares from Adani Family.
Adani Family and TOTAL SA shareholders shall ultimately hold 37.4% each and public shareholders shall hold remaining 25.2%.
The partnership and equity support from the partners will help Adani Gas Limited accelerate project executions in all its new geographical areas.
Adani Gas shall also pursue fuel retail business in India and target to setup 1,500 fuel stations offering top of the line products in the coming years.
This strategic partnership expansion will create:
Among the Largest Downstream Energy businesses in India Adani, the largest infrastructure conglomerate in India, and TOTAL, the world’s second largest LNG private player, will serve the fast-growing gas demand of the Indian market.
The expanded partnership will develop regasification terminals including Dhamra LNG, on the East coast of India; market LNG to the Indian markets and through Adani Gas, target to distribute gas to 7.5% of India’s population. This strengthens the partners’ commitment to make big stride towards India’s vision of promotion of natural gas and clean energy mix.
Both partners would make significant investments in the next 10 years across the businesses to develop India’s gas infrastructure, distribution, marketing businesses with presence in over 15 states reaching out to approximately 7.5% of India’s population and setting up global scale and world class LNG, gas distribution and fuel retail infrastructure in India
As part of the existing Joint Venture, Adani and Total in the coming years will target to build a fuel retail network of 1,500 retail stations, on the main roads of the country, such as highways and intercity connections.
Adani Gas will also be setting up 1,500 CNG stations for gas distribution over the next 10 years in its and its joint ventures’ geographical areas across 71 districts, 68 towns across 15 states in India.
In addition, Adani Gas and its joint venture will distribute gas to six million households in the next decade. Adani Gas CNG network will be developed exploring synergies including co-location of fuel retail and CNG outlets.
Both businesses would have significant complementarities by providing unique portfolio of multi product services including gas where Adani Gas Limited has exclusive marketing rights. These offerings are in line with international standards that will also include Total’s product range.
Speaking on the occasion, Adani Group Chairman, Gautam Adani, said, “Adani is delighted to deepen its strategic partnership with Total, a global energy major, to one of the largest downstream gas partnerships in India. Total’s investment in Adani Gas reinforces India’s natural gas and demand potential. The partnership will derive significant synergies between Adani’s capabilities of developing world-class assets and Total’s global best practices as well as leveraging business synergies across LNG, Fuel Retail and City Gas distribution. We look forward to working together towards delivering India’s vision for clean and green energy”
Wood Mackenzie research director Nicholas Browne said: “Total’s investment in Adani is undoubtedly a show of faith in India’s gas demand growth. Gas currently accounts for just under 6% of energy demand in India.
“The government has a target to increase this to 15% by 2030. While we don’t consider this likely, gas demand is set to grow considerably. Wood Mackenzie forecasts LNG demand will double from some 37 billion cubic metres (bcm) in 2018 to reach 75 bcm by 2030, equivalent to 7% of the energy mix. LNG will meet approximately 50% of this demand growth, providing a major growth opportunity for Total.”
Adani is attractive to Total for several reasons. Firstly, the development of the Mundra and Dhamra regasification terminals provides Total with market access for LNG. These terminals are also on the east coast where there is less competition from other terminals.
Secondly, Adani Gas was an active bidder in the recent distribution auction rounds. It is planning to expand the pipeline network. In turn, this will provide Total with firm demand for gas.
Lastly, developing a standalone gas marketing and distribution business in India would take several years. Working with Adani will accelerate the process for Total.
“Total has been aggressively expanding its LNG footprint. It took over Engie’s LNG portfolio in 2018 and recently sanctioned investment in Arctic-2 and the takeover of Anadarko led Mozambique project,” said Browne.
“It has access to competitive supply that it can provide Adani. However, the global LNG market is already competitive currently to place LNG volumes. So Adani would not have been short of alternative competitive suppliers. As such, for Adani this is likely to be more about de-risking an investment in expansion while also bringing in a global leader in gas and LNG so support this,” said Browne. fiinews.com
