Total in Talks to Sell Gas Network for $3.26 Billion
Total SA (FP) entered exclusive talks to sell the TIGF natural gas network in southwestern France to Snam SpA (SRG), Electricite de France SA and the Government of Singapore Investment Corp. for 2.4 billion euros ($3.26 billion).
The selected group will “support TIGF in its further development, while meeting commitments made to TIGF’s employees and partners,” Paris-based Total said in a statement yesterday. The unit, which has 5,000 kilometers (3,100 miles) of pipelines and more than a fifth of the country’s storage capacity, drew seven initial bids, Total Chairman and Chief Executive Officer Christophe de Margerie said in November.
Total, Europe’s third-biggest oil company, is seeking a buyer for the gas network as part of a plan to sell $15 billion to $20 billion of assets from 2012 to 2014 to raise cash for exploration and production. Total follows BP Plc (BP/) and others in stepping up sales to bolster the balance sheet while shifting its investment focus.
If completed at that price, it would be Total’s biggest sale by value, according to data compiled by Bloomberg. Total agreed to sell a stake in a Nigerian oil block to China Petrochemical Corp. last year for $2.5 billion. It also sold its stake in a Colombian field and pipelines to Sinochem International Corp. (600500) for $1 billion.
Snam owns Italy’s biggest gas distribution network, EDF is France’s state-controlled utility and the investment company manages Singapore’s long-term foreign reserves. Snam holds 45 percent of the bidding group, Singapore has 35 percent and EDF has 20 percent, using a fund established for dismantling its nuclear power plants.
Total has begun talks with unions about keeping jobs, benefits and TIGF’s headquarters in Pau, it said. The unit has almost 500 employees and carries 13 percent of the total volume of gas transported in France.
TIGF reported sales of more than 350 million euros in 2011.
The announcement about talks was released after the close of regular trading. Total rose 1.2 percent to 39.45 euros at the close in Paris yesterday.
BP and Royal Dutch Shell Plc (RDSA) are the two largest European oil companies.
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