Liquefied Natural Gas
A pioneer in the LNG industry, TOTAL today is one of the world’s leading players(1) in the sector and has sound and diversified positions both in the upstream and downstream portions of the LNG chain. LNG development is a key element of the Group’s strategy, with TOTAL strengthening its positions in most major production zones and markets.
Through its stakes in liquefaction plants(2) located in Qatar, the United Arab Emirates, Oman, Nigeria, Norway, Yemen and Angola and its gas supply agreement with the Bontang LNG plant in Indonesia, TOTAL markets LNG in all global markets. The share of LNG production sold by TOTAL in 2014 remained stable at 12.2 Mt, (12.3 Mt in 2013). The Group’s upcoming liquefaction projects, in particular in Australia and Russia, are aimed at increasing TOTAL’s share of LNG sold over the coming years.
Gas & Power is responsible for LNG operations downstream from liquefaction plants. It is in charge of marketing LNG on behalf of Exploration & Production and developing the Group’s downstream LNG portfolio for its trading, marketing and transport operations as well as re-gasification terminals.
Long-term Group LNG purchases
TOTAL acquires long-term LNG volumes most frequently from liquefaction plants in which the Group holds a stake. These volumes support the expansion of the Group’s worldwide LNG portfolio.
In Nigeria, as part of the Nigeria LNG project in which the Group has a 15% interest, TOTAL signed an LNG purchase agreement, initially intended for deliveries to the United States and Europe, for 1.17 Mt / y over a 20-year period starting in 2009.
TOTAL also holds a 20.48% stake in the Brass LNG project, on which studies are ongoing for a gas liquefaction plant with two LNG trains with a capacity of about 4.5 Mt / y each. In 2006, TOTAL signed a preliminary agreement with Brass LNG Ltd setting forth the principal terms of an LNG purchase agreement for 2.15 Mt / y. This purchase agreement is subject to the final investment decision
for the project.
In Norway, as part of the Snøhvit project, in which the Group holds an 18.4% stake, TOTAL signed in 2004 a purchase agreement for 0.78 Mt / y of LNG over a 20-year period primarily intended for North America and Europe. LNG deliveries started in 2007.
In Qatar, TOTAL signed purchase agreements in 2006 for up to 5.2 Mt / y of LNG from train 5 (16.7%) of Qatargas 2 over a 25-year period. This LNG was initially marketed in France, the United Kingdom and the United States. LNG deliveries started in 2009.
In Yemen, TOTAL signed a contract with Yemen LNG Ltd (39.62%) in 2005 to purchase 2 Mt / y of LNG over a 20-year period, initially intended for delivery to the United States and Europe. LNG deliveries started in 2009.
Since 2009, a growing part of the volume purchased by the Group pursuant to its long-term contracts related to the LNG projects mentioned above has been diverted to more buoyant Asian markets.
The new LNG sources described below are expected to support the growth of the Group’s LNG portfolio.
In Australia, TOTAL increased its stake in the Ichthys LNG project in early 2013 from 24% to 30%. Launched in early 2012, this project involves the construction of two LNG trains, each with a capacity of 4.2 Mt / y. In addition, TOTAL signed in 2011 an LNG purchase agreement amounting to 0.9 Mt / y over a 15-year period. The start of production is scheduled for the end of 2016 and the first LNG deliveries to long-term customers are expected to start in 2017.
In Russia, TOTAL owns a 20% direct stake in Yamal LNG, which is developing the South Tambey gas and condensates field and building a gas liquefaction plant with three trains and an LNG production capacity of 16.5 Mt / y. The final investment decision was made in December 2013. Concurrently, TOTAL signed two LNG purchase agreements with the project, amounting respectively to 3 Mt / y over a 23-year period and 1 Mt / y over a 15-year period.
In the United States, TOTAL entered into an agreement in 2012 with Kogas (Korea Gas Corporation) for the purchase of 0.7 Mt / y of LNG over a 20-year period from train 3 of the Sabine Pass gas terminal in Louisiana. LNG deliveries are expected to start in 2017. At the same time, TOTAL also entered into an agreement with Sabine Pass Liquefaction LLC for the purchase of 2 Mt / y of LNG over a 20-year period from train 5 of the Sabine Pass terminal. LNG deliveries will begin on the date on which train 5 is commissioned, which is scheduled for 2019. This agreement is conditional on, among other things, the final investment decision for the project and the obtaining of export and construction permits by Sabine Pass Liquefaction LLC, the entity which owns and operates the terminal. Finally, TOTAL concluded a contract with Mitsui in 2014 for the purchase of 0.5 Mt / y of LNG from the Cameron gas terminal in Louisiana, over a 10-year period starting from the date of commissioning of train 1, scheduled for 2018.
Long-term Group LNG sales
TOTAL has signed agreements for the sale of LNG from the Group’s global LNG portfolio:
In Spain, TOTAL signed an LNG sales agreement with Cepsa Gas Comercializadora (CGC). Under this agreement, TOTAL supplies 0.74 Mt / y to CGC over a 17-year period starting from 2006.
In China, TOTAL signed an LNG sales agreement with China National Offshore Oil Corporation (CNOOC). Under this agreement, which became effective in 2010, TOTAL supplies up to 1 Mt / y of LNG to CNOOC over a 15-year period.
In South Korea, TOTAL signed an LNG sales agreement in 2011 with Kogas. Under this agreement, TOTAL will deliver up to 2 Mt / y of LNG to Kogas between 2014 and 2031.
In Japan, TOTAL signed an LNG sales agreement in 2011 with Inpex. Under this agreement, TOTAL will deliver up to 0.2 Mt / y of LNG to Inpex over a 15-year period. Deliveries are expected to start in 2017.
In Singapore, TOTAL signed an LNG sales agreement in 2014 with Pavilion. Under this agreement, TOTAL will supply up to 0.7 Mt / y of LNG to Pavilion from 2018 over a 10-year period, as well as several cargoes before 2018. This agreement is subject to Pavilion obtaining an import license.
With regard to LNG transport operations, TOTAL has been using since 2006 a 145,000 m³ capacity LNG tanker, the Arctic Lady, under a long-term charter, to ship its share of production from the Snøhvit liquefaction plant in Norway. In late 2011, TOTAL signed a second long-term contract for the chartering of a 165,000 m³ LNG tanker, the Meridian Spirit, in order to strengthen its transport capacities with regard to its purchase commitments in Norway, as mentioned above.
The Group continues to develop its fleet. TOTAL signed a long-term charter agreement in April 2013 in this regard with SK Shipping and Marubeni for two 180,000 m³ LNG tankers. The vessels will serve in fulfilling the purchase agreements of Total Gas & Power, including commitments relating to the Ichthys LNG project in Australia and the Sabine Pass project in the United States. These tankers, scheduled for delivery in 2017, will be among the largest to navigate the Panama Canal following the canal’s expansion due to be completed in 2015.
As of December 31, 2013, the Group held a 30% stake in Gaztransport & Technigaz (GTT), which focuses mainly on the design and engineering of membrane cryogenic tanks for LNG tankers. Since then, TOTAL has sold its entire stake through the initial public offering (IPO) of GTT’s shares on Euronext Paris at the end of February 2014 and through a direct sale agreement in December 2014.
(1) Company data, based on upstream and downstream LNG portfolios in 2014.
(2) Exploration & Production is in charge of the Group’s natural gas liquefaction and production operations.