Total, the world’s second-largest LNG player, has expands its partnership with India’s Adani Group as part of its strategy to develop new gas markets.

The French oil major said the investment in India’s largest energy and infrastructure conglomerate, is aimed at contributing to the development of the country’s natural gas market.

“The Indian natural gas market represents a substantial growth perspective,” said Total.

“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.”

The 50:50 partnership between Adani and Total includes several assets across the gas value chain notably two imports and regasification LNG terminals: Dhamra in East India and potentially Mundra in the West.

As part of this partnership, Total will bring its “LNG and retail expertise” and will supply LNG to Adani Gas Limited. Total and Adani will also establish a joint venture to market LNG in India and Bangladesh.

The natural gas market in India will have a strong growth and is an attractive outlet for Total

Patrick Pouyanne

“Energy needs in India are immense and the Indian energy mix is key to the climate change challenge,” said Total chief executive Patrick Pouyanne.

“Firmly investing to develop the use of natural gas in India is in line with Total’s ambition to become the responsible energy major.

“The natural gas market in India will have a strong growth and is an attractive outlet for the world's second-largest LNG player that Total has become.

“Adani will bring its knowledge of the local market and its expertise in the infrastructure and energy sectors.”

Wood Mackenzie research director Nicholas Browne said Total’s investment in Adani is undoubtedly a “show of faith in India’s gas demand growth”.

“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,” he said.

“These terminals are also on the east coast where there is less competition from other terminals.

“Lastly, developing a standalone gas marketing and distribution business in India would take several years. Working with Adani will accelerate the process for Total.”

Gas currently accounts for just under 6% of energy demand in India. However, the government has a target to increase this to 15% by 2030.

Wood Mackenzie forecasts that India’s LNG demand will double from some 37 billion cubic metres (bcm) in 2018 to reach 75 bcm 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 Browne.

Total has been aggressively expanding its LNG footprint with its acquisition of Engie’s LNG portfolio in 2018, the recent sanctioned investment in Arctic-2 and the takeover of the Anadarko led Mozambique project.

“Total 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,” said Browne.

“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.”