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CORRECTED-Total looks downstream to spur gas demand, secure markets

Tue, 02nd Feb 2016 17:46

(Corrects paragraph 6 to show output and profit percentages areprojected contributions, not current ones)

* Total sees gas as key in energy transition

* Seeks to help boost demand in emerging economies

* Will invest in regasification plants, transport

By Bate Felix

PARIS, Feb 2 (Reuters) - France's Total isinvesting in gas and infrastructure as it looks to open up newmarkets for a fuel seen as a greener alternative to coal.

A move to gas from coal for energy can cut carbon emissionsby 50 percent, a quick win for countries aiming to meet theircarbon emission reduction targets, said Total's head of gasLaurent Vivier.

The company decided to remove coal-related businesses fromits portfolio last year, positioning itself to respond to gasdemand growth.

"The strategy is to secure gas outlets and boost demand,"Vivier told Reuters.

The global liquefied natural gas (LNG) market is growing by4 percent annually.

Total plans to increase LNG production to 20 million tonnesby 2020 from 12 million currently. LNG is expected to contribute20 percent of its output and 30 percent of its upstream profitsby 2020.

Vivier said Total was looking at ways to structure dealswhich could give it footholds into new markets and capture newgas buyers.

It signed one such deal with Indonesia's Pertamina onTuesday, a swap-and-purchase agreement in which Total will buy400,000 tonnes of Pertamina's LNG from Corpus Christi LNG,currently under construction in the United States.

Pertamina, which would have struggled to ship the LNG fromthe plant, will buy increasing volumes of LNG from Total, from400,000 to 1 million tonnes per year for a 15-year period from2020.

"We need to invest and we must invest in regasificationprojects in some countries. The countries need to developinfrastructure," Vivier said. He declined to say how much Totalhas committed to such projects.

"Most of the cost in gas is on logistics. Pipelines, shipsand plants involve huge cost. Once you have something that is soexpensive, you need to be in the whole chain," he said.

Total has stakes in several LNG projects in emergingcountries such as the Hazira LNG and Port in India operated withShell, and the Altamira LNG project in Mexico, anotherjoint venture with Shell.

Vivier said Total was looking at other gas projects in SouthAfrica, Morocco, Ghana, Abu Dhabi and Kuwait, and countrieswhere there is a growing demand for power.

"You don't know where the money is going to be made on gas,so you want to be integrated," he said. "You need to be a bigplayer, which is what Total is targeting."

Although gas production has been on the rise, the market hasbeen less active at creating demand, Vivier said. Prices for LNGhave been falling in tandem with oil prices due to globaloversupply and slow demand.

"We need to understand what is happening on the demand side.We need to go more downstream," he said.

Switching from coal to gas will require heavy investments interminals, regasification plants and converting coal-firedplants to gas, he said, but would ultimately create demand.

This is where Total can step in with finance and expertise,especially in developing countries and on projects that willenable it to unlock demand, Vivier said.

Total will face rivals Shell, which has completed a $52billion takeover of BG Group, creating the world'sbiggest LNG trader, and Italy's Eni, which discoveredthe largest known gas field in the Mediterranean off theEgyptian coast last August. (Reporting by Bate Felix; editing by Andrew Callus and JanHarvey)

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