10/17/2018
On October 16, Total and Adani Group signed an agreement to form a 50/50 joint venture and develop a multi-energy offering for India that encompasses liquefied natural gas (LNG), gas marketing and fuel retailing. Dilip Vaswani, Country Chair India, and Laurent Vivier, Senior Vice President, Gas, share their insights on what shapes the Indian energy market.
We recently announced a major agreement to develop our business in India. What is the economic background to Indian energy consumption?
Dilip Vaswani / When you look at India, you need to bear in mind the sheer size of the market. India has 1.3 billion inhabitants and a thriving economy that has considerable energy needs. On top of that, large segments of the population simply do not have access to energy. According to the IEA scenarios, global energy demand will expand by 30% to 2040. And the largest contributor to this growth — with an almost 30% increase — will be India. Today, the Indian primary energy mix is mainly — more than 45% — sourced from coal. Natural gas represents less than 5% of it and renewables account for barely 2%. The government has launched a plan to promote natural gas, both to help the country meet the COP21 targets and to improve air quality by reducing pollution in big cities, which has become a pressing political issue. The authorities hope that gas will account for 15% of the country's energy mix by 2022, which means that it will triple in just four years. Given these circumstances, India is looking for foreign investors to help it meet this ambition. And that’s where Total comes in.
So gas is a prominent part of the deal?
Laurent Vivier / Absolutely. Total ranks second in the world in the LNG business, and it’s important for us to address the Indian market in a more integrated way. Our objective is to meet gas demand through investment in infrastructure. Which is why we’re investing in regasification capacity, starting with 5 million in the East Coast Terminal Dhamra LNG. The gas will be exclusively provided by Total, sourced from our global LNG portfolio.
Why did we chose to team up with Adani?
L.V. / Total has very strong culture of looking for exactly the right partner when entering a market, especially one that is regulated and requires deep, specific familiarity. This reasoning prevails in Africa, the Middle East and our upstream and downstream businesses. India is no different. We are now well positioned with Adani as a partner, steps that are fully aligned with our strategy.
D.V. / Adani Group, with whom we are setting up a 50/50 joint venture, is a well-established Indian multinational conglomerate, with very wide-ranging expertise and a demonstrated ability to deliver projects. Its diverse businesses include power generation, port terminals and compressed natural gas (CNG) stations. It’s also the largest private sector city gas distributor in India. They were looking for a partner with LNG and retail know-how, robust financials and a strongly customer-oriented culture. This milestone transaction makes Total a real player in this market. The fact that we have signed a long-term deal shows our belief in the potential of this partnership.