Shell to buy Total’s stake in LNG assets

Shell Gas, a subsidiary of Royal Dutch Shell Plc, has entered a preliminary agreement with Total Gaz Electricité Holdings France to acquire its 26% equity in the Hazira LNG and Port venture in Gujarat

August 27, 2018

India is the fourth-largest Liquefied Natural Gas (LNG) importer after Japan, South Korea and China, and accounts for 5.8 per cent of the total global trade

Hazira LNG and Port venture includes a LNG regasification terminal in Gujarat built at a cost of US$641 million and a direct berthing multi-cargo port at Hazira

Shell will create a fully-owned and integrated value chain in India, including supply from global LNG portfolio, regasification at Hazira and downstream sales

Total has agreed to sell 500,000 tonnes of LNG per year to Shell over five years, on a delivery basis to supply the markets in India and neighboring countries

Shell Gas BV, a subsidiary of Royal Dutch Shell Plc, said on August 27 that it had entered into a preliminary agreement with Total Gaz Electricité Holdings France to acquire the latter’s 26 per cent stake in the Hazira LNG and Port venture in western state of Gujarat. Hazira LNG and Port venture comprises two companies – Hazira LNG Pvt Ltd (HLPL) that operates a LNG (liquefied natural sas) regasification terminal in Gujarat; and Hazira Port Pvt Ltd (HPPL), which manages a direct berthing multi-cargo port at Hazira. The Hazira LNG terminal, built in April 2005 at a cost of US$641 million, has a capacity of 2.5 million tonnes per annum.

Total and Shell have been jointly operating the asset since 2004. The deal will create a fully-owned and integrated Shell value chain in India – supply from the company’s global LNG portfolio, regasification at the Hazira facility, and downstream customer sales. This is consistent with Shell’s strategy to deepen its presence in India, the fourth largest LNG consumer in the world. Shell aims to contribute in bridging the energy deficit and further augment gas supplies in India. The move also comes amid the Government’s push to more than double the share natural gas in the national energy mix to 15 per cent by 2022 as part of an effort to reduce pollution.

As part of the deal, Total agreed to sell 500,000 tonnes of LNG per year to Shell over five years, on a delivery basis to help supply the markets of India and neighboring countries. The deliveries will be sourced from Total’s global LNG portfolio and are expected to begin in 2019. India accounts for 5.8 per cent of the total global LNG trade. Domestic LNG demand is expected to grow at a CAGR of 17 per cent to 306.54 million standard cubic meter per day by 2021 from 64 mscmd in 2015. India’s gas output is expected to touch 90 billion cubic metres (bcm) in 2040 from 32.6 bcm in 2017-18. Pipeline capacity stood at 16,470 km in September 2017.