France’s Total SA, a big player in the global LNG market, is positioning itself strategically across the length of the LNG supply chain – from production, liquefaction to shipping and sales, to reap the growing bounty.
The global natural gas market is likely to grow faster than crude oil in the next two decades, said French oil and gas major Total SA citing booming demand in Asia.
This outlook underpins Total’s recent big investments in the space, said Patrick Pouyanne, Total SA’s Chief Executive.
In July 2018, Total SA expects to close its $1.5 billion acquisition of Engie SA’s liquefied natural gas assets thus positioning it as the second largest producer of LNG in the world behind Royal Dutch Shell Plc.
“Over the next 20 years … we see many scenarios where consumption of natural gas will grow at a pace of next to 2 percent per year, versus 1 percent or 1.5 percent for oil,” said Pouyanne at the World Gas Conference in Washington, D.C.
Although Total’s numbers differs from those of the U.S. Energy Information Administration, which predicts global LNG growth to average at 1.5% per year between now and 2050, versus 0.7% for crude oil, its overall forecast that LNG’s global growth will outpace crude in the coming years remains intact.
Once it completes the acquisition of Engie LNG, Total SA’s would control 10% of the LNG world market compared to its present 6%. It will manage 40 million tonnes per annum (MTPA) of LNG volumes, from 15.6 MTPA now and will boost the number of LNG carriers it operates to 13 from three.
Significantly, Total is investing in across the length of the LNG supply chain: from production, liquefaction to shipping and sales, said Pouyanne.
He went on to add, the market’s growth is driven by low-cost production by U.S. shale fields along with strong demand from Asia, especially India and China.
Of note is the fact that in its response to U.S. tariffs threats China said it will slap additional 25% duties on U.S. petroleum imports but did not add LNG to the list.
However, even if LNG was impacted by a trade dispute, in the short term, Pouyanne said Total remains bullish.
“When you invest in something like LNG, you’re doing it for the next 25 or 30 years,” said Pouyanne
In efforts aimed at boosting demand for LNG, Total as acquired 25% stake in Clean Energy Fuels Corp, a distributor of compressed natural gas and LNG for transportation, by investing $83.4 million in it.
As part of the deal, Total will provide up to $100 million through a leasing program which will place thousands of LNG heavy duty trucks on the road, said Pouyanne and Andrew Littlefair, CEO of Clean Energy.