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TOTAL (TOT) Expands LNG Operation in Russia Via Acquisitions

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TOTAL S.A. (TOT - Free Report) announced that it has signed a definitive agreement with Novatek for the acquisition of a direct 10% interest in Arctic LNG 2, a liquefied natural gas development led by Novatek on the Gydan Peninsula, Russia. Courtesy of TOTAL’s existing stake in Novatek and acquisition of fresh interest in the same, the company’s overall economic interest in this new LNG project will be nearly 21.6%.

Both the companies have consented that TOTAL will have the opportunity to acquire a 10-15% direct interest in all Novatek's future LNG projects located on the Yamal and Gydan peninsulas.

Global Demand for Liquefied Natural Gas (LNG)

Per the LNG outlook of Royal Dutch Shell PLC (RDS.A - Free Report) , global demand for LNG will increase in the range of 4-5% within the 2015-2030 time period. Given massive long-term growth prospects of LNG, TOTAL has undertaken various initiatives to strengthen its position in the LNG market.

Rising air pollution is a global menace and there has been a gradual shift toward clean source of fuel to lower emission levels. The massive growth of LNG projects across globe will help address the need for cleaner fuel.  

TOTAL’s Involvement in LNG Projects

Post the acquisition of Engie’s LNG assets, TOTAL is the second largest player in LNG business on a global scale and its position is further strengthened with the startup of Cameron LNG project.

The acquisition of interest in Arctic LNG 2 will help the company cater to the rising demand for clean energy in the Asian markets.

The company has also signed a MOU with Sempra Energy (SRE - Free Report) for the development of North America LNG Projects.

During fourth-quarter 2018, TOTAL sold 3.32 million tons (MT) of LNG, up 24% from 2.67 MT in the prior-year period. The new projects and collaborations by the company will further increase LNG sales volume over the long term.

Zacks Rank and A Key Pick

TOTAL currently has a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
A better-ranked stock in the same industry is OMV AG (OMVJF - Free Report) , holding a Zacks Rank #2 (Buy).

The Zacks Consensus Estimate for OMV AG’s 2019 and 2020 earnings has been upwardly revised by 2.7% and 18.8%, respectively, in the past 60 days.

Price Movement

TOTAL’s shares have gained 6.5% in the past three months, outperforming its industry’s growth of 4.7%.

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