Total to buy 37.4 percent stake in Adani Gas

French energy giant Total announced the acquisition of a 37.4% stake in Gautam Adani-led Adani Gas on October 14. The gas marketing and distribution company, however, did not reveal the value of the deal. The announcement comes a year after the two firms announced a 50:50 joint venture to import and retail natural gas.

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"The partnership between Adani (50 per cent) and Total (50 per cent) includes several assets across the gas value chain notably two imports and regasification LNG terminals: Dhamra in East India and potentially Mundra in the west, as well as Adani Gas, one of the four main distributors of city gas in India of which Adani holds 74.8 per cent and of which Total will acquire 37.4 per cent," the French firm said in a statement.

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To reach a 37.4% shareholding in Adani Gas, Total will initially launch a tender offer to public shareholders to acquire up to 25.2% of equity shares before buying the remaining shares from Adani, it said. Total, the world's second-largest liquefied natural gas (LNG) player, said it is expanding its partnership with the Adani Group - the largest energy and infrastructure conglomerate in India, to contribute to the development of the Indian natural gas market.

'Aims to expand distribution of gas'

The Indian natural gas market represents a substantial growth perspective. It is currently only 7 per cent of the energy consumption but has grown over the last three years by more than 5% per annum, supported by an active policy of the Indian government that aims to diversify its energy mix and develop domestic use of gas in cities and as fuel for vehicles. India has set the ambitious target of increasing the share of natural gas in its energy mix to 15 per cent by 2030.

"Adani Gas aims to expand its distribution of gas in the next 10 years through its 38 concessions covering 7.5 per cent of the Indian population and market natural gas to industrial, commercial and domestic customers, targeting 6 million homes as well as through 1,500 retail outlets of natural gas for vehicles," the statement said.

As part of this partnership, Total will bring its LNG and retail expertise and will supply LNG to Adani Gas. Total and Adani will also establish a joint venture to market LNG in India and Bangladesh. "Energy needs in India are immense and the Indian energy mix is key to the climate change challenge. Firmly investing to develop the use of natural gas in India is in line with Total''s ambition to become the responsible energy major," said Patrick Pouyanné, Chairman and CEO of Total.

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Knowledge of the local market

The natural gas market in India will have a strong growth and is an attractive outlet for the world''s second-largest LNG player that Total has become, he said, adding that Adani will bring its knowledge of the local market and its expertise in the infrastructure and energy sectors. This partnership with Adani is a cornerstone to our development strategy in this country. "Taking into account the divestiture of the group’s interest in Hazira terminal early 2019, the establishment of this partnership on gas in India represents a net acquisition cost for Total of approximately USD 600 million over 2019-2020," the statement added.

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