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TOTAL Extends Deal With Sonatrach to Fortify LNG Portfolio


TOTAL S.A TOT recently strengthened its partnership agreement with Sonatrach to supply liquefied natural gas (LNG). The companies announced a three-year extension of the existing supply contracts.

The aim of this strategic move is to provide two million tons per year of Algerian LNG in the French market, mainly through the LNG terminal at FosCavaou. The sub-charter of an LNG tanker of TOTAL by Sonatrach is also part of the deal.

Particularly, TOTAL is one of the largest private global LNG players with a global market share of 10% and a strong position across the LNG value chain. The company sells LNG in all geographies via its stakes in liquefaction plants located in Qatar, Nigeria, Russia, Norway, Oman, and other places.

TOTAL has been making efforts to solidify its LNG portfolio, globally. In May 2019, the company had acquired 10% stake in Arctic LNG 2, a LNG development, led by Novatek on the Gydan Peninsula, Russia. Courtesy of TOTAL’s existing share in Novatek and the acquisition of additional interest in the same, its overall economic ownership in this new LNG project now stands at nearly 21.6%

Prior to this, TOTAL had purchased Engie’s LNG assets, making the company the second largest player in LNG business on a global scale. Moreover, in 2018, it had also signed a MOU with Sempra Energy SRE for the development of North America LNG Projects. Such initiatives by the company are helping it expand its LNG arm and the trend is likely to continue.

Zacks Rank & Price Performance

The stock currently carries a Zacks Rank #3 (Hold). In the past three months, shares of the company have gained 11.3%, underperforming the industry’s 14.4% rally.

Stocks to Consider

A few better-ranked stocks fromthe same industry are Royal Dutch Shell PLC RDS.A and Chevron Corporation CVX, both presently carrying a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Royal Dutch Shell PLC’s Zacks Consensus Estimate for 2020 earnings has moved 50% north in the past 30 days. Its expected long-term (3-5 years) growth rate is 5%.

Chevron Corporation delivered a positive earnings surprise of 35.39% in the trailing four quarters, on average. Its expected long-term (3-5 years) growth rate is 5%.

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