Integrated oil and gas company TOTAL S.A. (TOT) further enhanced its worldwide natural gas assets. TOTAL’s subsidiary Total E&P Tajikistan B.V. acquired an interest in Bokhtar PSC in Tajikistan. This field was owned by Kulob Petroleum Limited, a subsidiary of Tethys Petroleum Limited, jointly with CNPC Central Asia B.V., a subsidiary of CNPC.
Post acquisition, Total E&P Tajikistan B.V. and CNPC Central Asia B.V. will each hold a 33.335% interest in the PSC, while Kulob Petroleum Limited will retain a 33.33% stake. The deal has been approved by the Tajikistan government. The value of the deal was not disclosed. We assume that TOTAL will leverage its strong cash position to finance the deal.
Bokhtar PSC covers an area of 13899.67 sq miles (36,000 sq. km) at the northern end of the Afghan-Tajik basin. As per the U.S. Geological Survey estimate, the Afghan-Tajik basin is expected to have 946 million barrels of crude oil, 7 trillion cubic feet of natural gas, and 85 million barrels of natural gas liquids.
We believe the immense reserve potential of this basin will certainly lure global oil and gas majors like Exxon Mobil (XOM), Royal Dutch Shell (RDS.A) and Chevron Corporation (CVX) among others.
The abundance and clean burning nature of natural gas are making it popular among consumers. The EIA forecasts the use of natural gas in the U.S. to increase from 24.37 trillion cubic feet in 2011 to 29.54 trillion cubic feet in 2040, increasing at an average annual rate of 0.7%. Going forward apart from the U.S. the usage of natural gas will increase in other parts of the globe.
Given the rising demand for natural gas, TOTAL is systematically adding assets to its natural gas portfolio. In the first quarter 2013, the company invested substantially to acquire a 6% additional stake in Ichthys LNG. In addition the carry agreement in the Utica shale gas and condensate field in the U.S. also widened its operations.
The stake acquired in Bokhtar PSC will boost TOTAL’s overall gas production. We note that there is a huge demand for natural gas in the emerging Asian markets.
France-based TOTAL is one of the largest publicly traded, globally integrated oil and gas companies based on production volumes, proved reserves and market capitalization. TOTAL currently has a Zacks Rank #4 (Sell).
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