PERTH (miningweekly.com) – Global energy player Total will partner with Indian major Adani to develop the Indian natural gas market.

Total will purchase 37.4% shares in Adani Gas 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.

The partnership between Adani and Total includes several assets across the gas value chain notably two imports and regasification liquefied natural gas (LNG) terminals in Dhamra, in East India, and potentially Mundra, in the West.

Adani said on Monday that both partners would make significant investments in the next ten years across the businesses to develop India’s gas infrastructure, distribution and marketing businesses with presence in over 15 states reaching 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 joint venture, Adani and Total will target building a fuel retail network of 1 500 retail stations, on the main roads of the country, while Adani Gas will also be setting up 1 500 compressed natural gas stations for gas distribution over the next ten years in geographical area in India. In addition, Adani Gas will distribute gas to six-million households in the next decade.

Total told shareholders that the Indian natural gas market represented a substantial growth opportunity. It is currently only 7% 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% by 2030.

Advisory firm Wood Mackenzie noted that Total’s investment in Adani was 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 gas demand will double from some 37-billion cubic metres in 2018 to reach 75-billion cubic meters 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,” said Wood Mackenzie research director Nicholas Browne.

"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,” Browne said.

He pointed out that Total has been aggressively expanding its LNG footprint, aquiring Engie’s LNG portfolio in 2018 and recently sanctioning investment in Arctic-2 and the takeover of the Anadarko-led Mozambique project.

“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."