Total SA has become a full-fledged player in France's deregulated natural gas market. The kick-off came Oct. 18 with the termination of long-standing contracts between Total and Gaz de France and the separation of their cross-holdings in two jointly held French gas transmission and supply subsidiaries—Gaz du Sud-Ouest, now wholly owned by Total, and Compagnie Française du Méthane, now fully owned by GDF.
Yves-Louis Darricarrère, Total's executive vice-president, gas and power, told a recent press conference that the group was aiming for a 15-20% share of France's industrial and commercial market by 2010, up from its current 10% share.
This part of the market, deregulated in July, is the segment on which Total wishes to focus as it does in the UK, where its market share is 19%. The private sector, due for deregulation in 2007, was not within the group's competence, he said.
Total, GDF separation
The separation with GDF, he explained, "is an important stage in our overall natural gas growth strategy." Within the unbundling process required by the gas market regulations, a trading subsidiary is being set up called Total Energie Gaz, which will start marketing the group's gas production in France in 2005.
GDF's total gas sales hover at about 1 billion euros. However, they might be constrained by the narrow field for gas-fired electric power in France's nuclear-dominated power market.
Through its separation agreement with GDF, Total has acquired the Izaute natural gas storage facility and the Lacal gas pipeline connector with Spain, as well as a 30% stake in the Fos Cavaou LNG terminal, due on stream in 2007, giving the company access to 2.25 billion cu m (bcm)/year of gas.
Under its unbundling obligations, Total is rolling these logistics into a new subsidiary called Total Infrastructure Gaz France (TIGF), which so far owns a 13.5% share of France's gas transportation network and 20% of its gas storage capacity.
TIGF also will take over contracts GDF signed with Total Norvège involving 1.5 bcm/year of gas. Under these contracts Total sold its Norwegian gas to GDF, which in turn provided Total with enough gas for its needs in France.
Total now will sell its Norwegian gas directly in the French market. However, GDF will continue to sell gas to Total at different points in France, totaling about 3.5 bcm/year from its long-term contracts. These purchases will be gradually reduced as Total's gas production takes over.
TIGF also will operate the 2 bcm/year gas pipeline to Spain in southwestern France, from Lussagnet to Bilbao, which Total is beginning to build. A first stage will carry 500 million cu m of gas by 2006 at a cost of 30 million euros. A second, 70 million euro stage would be built later.