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TotalEnergies (TTE) Inks 16-Year LNG Deal With Sembcorp Fuels
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TotalEnergies SE (TTE - Free Report) announced that it has signed a sale and purchase agreement (SPA) with Sembcorp Fuels, a wholly-owned subsidiary of Singapore-based Sembcorp Industries.
Per the agreement, up to 0.8 million tons of liquefied natural gas (LNG) will be delivered annually for 16 years, starting 2027. The LNG will come from the worldwide inventory of TotalEnergies.
TotalEnergies is helping Singapore meet its decarbonization targets and maintain energy security by providing this extra LNG supply. This agreement also demonstrates the company’s dedication to helping its customers shift toward decarbonization.
Focus on LNG
TTE is one of the major global LNG producers with a market share of nearly 12% and a worldwide portfolio of more than 50 million tons per year (Mt/y). This can be attributed to the company’s diverse investments in liquefaction facilities across all continents.
The company has strong presence throughout the LNG value chain, with access to more than 20 Mt/y of European regasification capacity, production, shipping, trading and LNG bunkering.
TTE aims at expanding the proportion of natural gas in its sales mix to nearly 50% by 2030. It will do so by focusing on reducing carbon emissions and methane emissions related to the gas value chain, and collaborating with regional partners on switching from coal to natural gas.
In June 2023, TotalEnergies signed an agreement with NextDecade (NEXT - Free Report) and Global Infrastructure Partners to participate in the development of the Rio Grande LNG project, a LNG plant located in South Texas.
Per the terms of the agreement, TTE needed to offtake 5.4 million tons per annum (Mtpa) of LNG in the first 20 years of the deal’s tenure, which will further increase the company's U.S. LNG export capability to more than 15 Mtpa by 2030.
Growth Prospects
Given its clean burning nature, the demand for natural gas continues to expand globally. The development of new LNG projects caters to this rising demand.
Recently, Shell plc (SHEL - Free Report) released its report, announcing that the global demand for LNG is estimated to rise more than 50% by 2040, as China and countries in South and Southeast Asia use LNG to support their economic growth. Per a SHEL report, demand for natural gas liquids is expected to reach 625-685 Mtpa in 2040.
SHEL is committed to investments in new LNG projects, which is a positive development for the energy industry. The company's commitment will help ensure that the world has access to a reliable and affordable source of energy as it transitions to a cleaner future.
Other oil and gas operators like Chevron Corporation (CVX - Free Report) will also play a vital role in the growth of LNG worldwide. In 2023, Chevron partnered with Sembcorp to lower LNG emissions. The project involves modifying six of Chevron's existing LNG carriers, with the option to modify additional vessels in the future.
The LNG fleet modification project is expected to have a significant impact on the environment by reducing Chevron's carbon footprint. This reduction in carbon emissions is a critical step toward a more sustainable energy future, especially with growing LNG demand.
SHEL’s long-term (three-to-five-year) earnings growth rate is 4%. It delivered an average earnings surprise of 7.6% in the last four quarters.
CVX’s long-term earnings growth rate is 14.27%. The Zacks Consensus Estimate for 2024 earnings is pinned at $13.03 per share.
Price Performance
In the past month, shares of TotalEnergies have lost 3% compared with the industry’s 4.8% decline.
Image: Shutterstock
TotalEnergies (TTE) Inks 16-Year LNG Deal With Sembcorp Fuels
TotalEnergies SE (TTE - Free Report) announced that it has signed a sale and purchase agreement (SPA) with Sembcorp Fuels, a wholly-owned subsidiary of Singapore-based Sembcorp Industries.
Per the agreement, up to 0.8 million tons of liquefied natural gas (LNG) will be delivered annually for 16 years, starting 2027. The LNG will come from the worldwide inventory of TotalEnergies.
TotalEnergies is helping Singapore meet its decarbonization targets and maintain energy security by providing this extra LNG supply. This agreement also demonstrates the company’s dedication to helping its customers shift toward decarbonization.
Focus on LNG
TTE is one of the major global LNG producers with a market share of nearly 12% and a worldwide portfolio of more than 50 million tons per year (Mt/y). This can be attributed to the company’s diverse investments in liquefaction facilities across all continents.
The company has strong presence throughout the LNG value chain, with access to more than 20 Mt/y of European regasification capacity, production, shipping, trading and LNG bunkering.
TTE aims at expanding the proportion of natural gas in its sales mix to nearly 50% by 2030. It will do so by focusing on reducing carbon emissions and methane emissions related to the gas value chain, and collaborating with regional partners on switching from coal to natural gas.
In June 2023, TotalEnergies signed an agreement with NextDecade (NEXT - Free Report) and Global Infrastructure Partners to participate in the development of the Rio Grande LNG project, a LNG plant located in South Texas.
Per the terms of the agreement, TTE needed to offtake 5.4 million tons per annum (Mtpa) of LNG in the first 20 years of the deal’s tenure, which will further increase the company's U.S. LNG export capability to more than 15 Mtpa by 2030.
Growth Prospects
Given its clean burning nature, the demand for natural gas continues to expand globally. The development of new LNG projects caters to this rising demand.
Recently, Shell plc (SHEL - Free Report) released its report, announcing that the global demand for LNG is estimated to rise more than 50% by 2040, as China and countries in South and Southeast Asia use LNG to support their economic growth. Per a SHEL report, demand for natural gas liquids is expected to reach 625-685 Mtpa in 2040.
SHEL is committed to investments in new LNG projects, which is a positive development for the energy industry. The company's commitment will help ensure that the world has access to a reliable and affordable source of energy as it transitions to a cleaner future.
Other oil and gas operators like Chevron Corporation (CVX - Free Report) will also play a vital role in the growth of LNG worldwide. In 2023, Chevron partnered with Sembcorp to lower LNG emissions. The project involves modifying six of Chevron's existing LNG carriers, with the option to modify additional vessels in the future.
The LNG fleet modification project is expected to have a significant impact on the environment by reducing Chevron's carbon footprint. This reduction in carbon emissions is a critical step toward a more sustainable energy future, especially with growing LNG demand.
SHEL’s long-term (three-to-five-year) earnings growth rate is 4%. It delivered an average earnings surprise of 7.6% in the last four quarters.
CVX’s long-term earnings growth rate is 14.27%. The Zacks Consensus Estimate for 2024 earnings is pinned at $13.03 per share.
Price Performance
In the past month, shares of TotalEnergies have lost 3% compared with the industry’s 4.8% decline.
Image Source: Zacks Investment Research
Zacks Rank
The company currently has a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.