Total SA Picks up 37% Stakes in Adani Gas for Rs 5700 Crore
An official communiqué from the Adani Group said that city gas distribution is a natural extension of the plans of both partners to invest in infrastructure and assets worth over $1billion, which span LNG infrastructure and marketing and fuel retail business, announced in October 2018.
Total SA, the leading French energy company, chipped in Rs 5700 crore to pick up 37.4 per cent stakes in Adani Gas Ltd, the Gautam Adani-owned company that retails gas to automobiles and households. In the new scheme of things, the French company will get a strong footprint in a market where annual liquefied natural gas (LNG) demand is expected to hit 28 million tonne by 2023. Significantly, nearly a year ago, the French company had inked a pact with billionaire Gautam Adani to make forays into India’s fast-growing energy market.
An official communiqué from the Adani Group on Monday said that city gas distribution is a natural extension of the plans of both partners to invest in infrastructure and assets worth over $1billion, which span LNG infrastructure and marketing and fuel retail business, announced in October 2018. Interestingly, Total, in October, 2018, had formed a 50:50 JV with the Adanis for two LNG import terminals of Adani on the east and west coast of India as well as for setting up of 1,500 petrol pumps in the country over 10 years, after exiting its JV with Royal Dutch Shell in August, 2018.
As per the latest understanding, Total will first make an open offer to buy a 25.2 per cent stake in Adani Gas. And then depending on the success in the open offer, it will buy remaining stakes from Adani to take its holding to 37.4 per cent in the company. At present, the Adani family holds a 74.8 per cent stake in Adani Gas and will dilute shares to the public to bring down its holding to 37.4 per cent -at par with Total, the two companies pointed out in separate statements.
The latest move by Total has come close on the heels of Reliance Industries announcing that Saudi Arabian Oil Co will buy 20 per cent of its oil-to-chemical business at an enterprise value of $75 billion. Leading global energy companies’ growing interests to expand presence in India can be attributed to the fact that India is the third-largest and the fastest-growing energy consumer in the world.
Adani-Total JV, where the two groups hold 50 per cent stake each, is building a 5 million tonne LNG import terminal
at Dhamra in Odisha and will potentially hold a 25 to 50 per cent interest in Gujarat government's Mundra import facility.
This JV would also supply 3 million tonne per annum of LNG to India and Bangladesh. And now, Adani Gas, wherein Total and Adani would hold 37.4 per cent stake each, on its parts, is targeting to set up 1,500 CNG stations to retail gas to automobiles and piped cooking gas to 6 million households. It will also set up 1,500 petrol pumps over 10 years.
Gautam Adani, Chairman, Adani Group, said that 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. They look forward to working together towards delivering India's vision for clean and green energy, he said.
Patrick Pouyanne, CEO, Total SA, said that energy needs in India are immense. He said that the natural gas market in India will have strong growth and is certainly an attractive outlet for them.