Total in $815m Toshiba US LNG deal

French giant takes over Japanese outfit’s Freeport LNG tolling agreement and gains $800 million

Patrick Pouyanne: Total chief executive
Patrick Pouyanne: Total chief executiveREUTERS/SCANPIX

Total has bought the liquefied natural gas business of Toshiba in a deal that is seeing the Japanese player withdraw from the LNG sector.

The French supermajor has agreed to pay $15 million for Toshiba’s US LNG division, but Toshiba is to make a one-off payment of $815 million to Total in relation to LNG contracts it has entered into.

The assets being taken over by Total include a 20-year tolling agreement for 2.2 million tonnes per annum of LNG from the third train at Freeport LNG, which is set to come online in the second quarter next year.

Those contracts that Toshiba is not buying out of will be cancelled.

The Japanese player said it expects to book a loss of 93 billion yen ($858.18 million) on the deal.

“Under the ‘Toshiba Next Plan’, Toshiba is maximising its corporate value by concentrating resources on growth areas, and with the close of (this) transfer, Toshibia will complete its withdrawal from the LNG business, which it has characterised as a non-core business,” the Japanese company.

Total said the deal is expected to close by the end of the year.

“The takeover of Toshiba’s LNG portfolio is in line with Total’s strategy to become a major LNG

portfolio player,” said Philippe Sauquet, Total’s president gas, renewables & power.

“Adding 2.2 million tpa of LNG to our existing positions in the US, in particular Cameron LNG, will enable optimisations of the supply and operations of these LNG sources.

“Already an integrated player in the US gas market, Total is set to become one of the leading US LNG

exporters by 2020 with a 7 million tpa portfolio.”

Late last month, US f ederal regulators authorised a planned fourth train at the Freeport LNG terminal in Texas to export to nations with which the US does not have a free trade agreement (FTA).

An order issued by the US Department of Energy allows Freeport LNG to export up to 720 million cubic feet per day from Train 4 to non-FTA nations and nations with which trade is not prohibited under US law or policy.

Train 4, which was approved by the Federal Energy Regulatory Commission (Ferc) earlier in May, is expected to add more than 5 million tonnes per annum of LNG production to its existing project, increasing the total export capability of the facility to more than 20 million tpa.

Privately-held Freeport LNG expects to see commercial start-up from its first train in the third quarter of this year, with the initial three trains online by the middle of next year. Construction on Train 4 is scheduled to begin later this year with operations to start in 2023.

However, on Friday Ferc granted the project's request to extend the deadline to complete the initial three-train development by 11 months, to 30 June 2020. The original Ferc order issued in 2014 required the facility to be placed in service by 30 July of this year.

Developers anticipated starting up the terminal by the fourth quarter of 2018, but delays pushed back construction.
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Published 3 June 2019, 07:06Updated 3 June 2019, 07:06
LNG