TOTAL to Buy LNG form Kogas - Analyst Blog

By Zacks | September 14, 2012 AAA

Integrated oil and gas company TOTAL S.A. (TOT) announced that its unit Total Gas & Power Limited has entered into a long-term agreement with South Korean national company Korea Gas Corporation ("Kogas") to purchase liquefied natural gas ("LNG").

Per the agreement, TOTAL's unit will purchase 0.7 million metric tons of LNG per year from Kogas for twenty years. The LNG will be supplied from Sabine Pass terminal in Louisiana, scheduled to start operation from 2017.

This new agreement comes on the heels of another signed by TOTAL to purchase 2 million metric tons per year of LNG from Kogas, generated from GLNG project in Australia.

There has been increasing awareness on a global scale against the use of polluting fossil fuel for power generation. The developing countries in Asia and some of the European countries are looking forward to utilizing natural gas and LNG to meet their ever increasing demand for power generation.

To capitalize on the rising demand for LNG worldwide, TOTAL has been very active, entering into partnership and acquisition deals in different prospects around the globe.

In July 2012, TOTAL increased its holding in the Ichthys liquefied natural gas project in Australia by another 6% to 30%. Backed by its strong financials, TOTAL is also able to acquire stakes in some of the major LNG projects in the Middle East, Asia-Pacific and Russia.

Most importantly, TOTAL is securing interest in LNG re-gasification capacities in key LNG importing countries. By this way, the company has gradually strengthened its presence in the entire LNG cycle, which we believe will boost its margins and bottom-line.  

TOTAL S.A. currently retains a Zacks #3 Rank (short-term Hold rating). Numbering among its competitors in the global arena is BP Plc. (BP).

France-based TOTAL is one of the largest publicly traded, globally integrated oil and gas companies based on production volumes, proved reserves and market capitalization. The company has exploration and production operations spanning five continents. With a market capitalization of $121.1 billion, the company has 96,104 full time employees.

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