Total SA to buy 37.4% stake in Adani Gas for nearly Rs 5,700 crore

The deal will be the largest foreign direct investment in India's city gas distribution

In a sign of rising global interest in India’s oil and gas sector, French oil major Total has signed a definitive agreement to acquire 37.4 per cent stake in Gautam Adani-led Adani Gas for about Rs 5,700 crore.

Total will purchase the shares in Adani Gas through a tender offer to public shareholders to acquire up to 25.2 per cent shares and purchase the residual shares from the Adani promoter family.

This comes on a day when another major ExxonMobil signed a memorandum of understanding (MoU) with Indian Oil Corporation to expand Liquefied Natural Gas (LNG) business in India. This tie-up will focus on exploring new models of delivering cost-effective natural gas in India where it is most needed to complement traditional pipelines. Other global players that have already shown interests in India include Saudi Aramco, ADNOC, BP, Shell, and Rosneft.

“Adani Family and Total shareholders shall ultimately hold 37.4 per cent each and public shareholders shall hold remaining 25.2 per cent,” Adani Gas said on Monday. The deal will be the largest foreign direct investment in the country’s city gas distribution, making it one of the largest downstream energy partnership.

Total Chief Executive Officer Patrick Pouyanne said it would take at least six months for the deal to materialise. “Indian regulation for listed companies is a little complex and it will take more than six months to take the shares. In terms of the company’s liquefied natural gas (LNG) business, the company has a cash flow of $2 billion and we have a target to increase to $6 billion by 2025 and Indian market will contribute to this goal,” he said on the sidelines of CERA Week in Delhi. The firm said CGD is a natural extension of the plans of both partners to invest in infrastructure and assets worth over $1 billion, which span LNG infrastructure and marketing and fuel retail business, announced in 2018.

Adani Gas is also planning to set up 1,500 fuel stations offering top of the line products in the coming years. The expanded partnership will develop regasification terminals, including Dhamra LNG, on the East coast of India; market LNG to the Indian markets and through Adani Gas, target to distribute gas to 7.5 per cent of India’s population. “Both partners would make significant investments in the next 10 years to develop India’s gas infrastructure, distribution, marketing businesses with a presence in over 15 states,” it said. 

Adani Gas and its joint venture will distribute gas to 6 million households in the next decade. Adani Gas CNG network will be developed exploring synergies including co-location of fuel retail and CNG outlets, the statement added.

Gautam Adani, chairman, Adani Group, said, “The partnership will derive significant synergies between Adani’s capabilities of developing world-class assets and Total’s global best practices as well as leveraging business synergies across LNG, Fuel Retail and City Gas distribution. We look forward to working together towards delivering India’s vision for clean and green energy." 

The tie-ups also include two regasification LNG terminals — Dhamra in the east and potentially Mundra in the west.