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TotalEnergies SE (NYSE: TTE), along with the Nigerian National Petroleum Corporation Ltd ("NNPCL"), has taken the final investment decision for the development of the Ubeta gas field. TTE is the operator of the OML 58 onshore license in Nigeria with a 40% interest, while NNPCL holds the remaining 60%.
The OML 58 license, situated in Rivers state and around 49.7 miles (80 km) northwest of Port Harcourt, includes the two producing fields — the Obagi oil field and the Ibewa gas and condensate field. The Obite treatment center processes the OML 58 gas production, which is then sent to the Nigeria LNG (NLNG) facility as well as the country's domestic gas market.
The Ubeta gas condensate field will be developed with a new 6-well cluster connected to the existing Obite facilities through a 6.8 miles (11 km) buried pipeline. With a plateau of 300 million cubic feet per day (about 70,000 barrels of oil equivalent per day including condensates), the production is anticipated to begin in 2027. Ubeta gas will be delivered to NLNG, a Bonny Island liquefaction plant where TotalEnergies owns a 15% stake and is currently expanding its capacity from 22 to 30 metric tons per annum (Mtpa).
Focus of TotalEnergies in the LNG Chain TTE benefits from an integrated position across the LNG value chain, including production, transportation, access to more than 20 Mtpa of regasification capacity in Europe, trading and LNG bunkering.
TotalEnergies' global LNG portfolio was 44 Mtpa in 2023, owing to its interests in liquefaction plants in all geographies. The company continues to expand its LNG operation through acquisition, partnership and agreements. Its large fleet of LNG tankers and reserved capacity in several regasification terminals make it a perfect partner for the development of LNG projects globally.
TTE's expanding LNG operation is in sync with its long-term ambition to increase the share of natural gas in its sales mix to close to 50% by 2030, reduce carbon emissions and eliminate methane emissions associated with the gas value chain.
The Ubeta project is in line with the company's strategy of developing low-cost and low-emission projects. The carbon intensity of the project is expected to be further reduced through a 5-megawatt solar plant currently under construction at the Obite site and the electrification of the drilling rig.
Demand for LNG is on the Rise The Institute for Energy Economics and Financial Analysis has released a report indicating that the worldwide LNG market is about to experience an unparalleled surge of new liquefaction projects, starting late 2024.
This surge is expected to be the quickest expansion in the history of the global LNG sector, marking a 40% rise over a span of five years. The sector is poised to increase its liquefaction capacity nearly five times from 2025 to 2028, compared with the preceding four-year span.
Along with TTE, other companies like Shell plc (NYSE: SHEL), Cheniere Energy Inc. (NYSE: LNG) and Exxon Mobil Corporation (NYSE: XOM) are also set to benefit from the growing LNG market.
Shell is aggressively pursuing an expansion strategy to solidify its position as a leader in LNG markets. In June 2024, it finalized a deal to acquire Pavilion Energy, the Singaporean LNG firm, from Temasek. The deal includes Pavilion Energy's LNG supply contracts for 6.5 Mtpa from suppliers like Chevron, BP and QatarEnergy. It should help Shell expand its LNG portfolio and meet its long-term objective of growing its LNG business by 20-30% within 2030.
SHEL's long-term (three- to five-year) earnings growth rate is 4.64%. The Zacks Consensus Estimate for 2024 sales indicates a year-over-year increase of 8.8%.
Cheniere Energy, being the first company to receive regulatory approval to export LNG from its 2.6 billion cubic feet per day Sabine Pass terminal, certainly enjoys a distinct competitive advantage. As a proof of the natural gas exporter's efforts to contract its LNG capacity on a long-term basis, it informed last year that it has signed long-term contracts to deliver some 180 million tons of natural gas chilled to liquid through 2050.
The Zacks Consensus Estimate for 2024 sales indicates a year-over-year decrease of 23.7%. The company delivered an average earnings surprise of 58.9% in the last four quarters.
XOM aims to double its capacity to 40 Mtpa by 2030, up from the current production of nearly 30 Mtpa. This growth trajectory marks a significant step from the company's 2020 announcement, reflecting its strategic shift toward self-reliance in LNG trading.
XOM's long-term earnings growth rate is 3%. The Zacks Consensus Estimate for 2024 sales indicates a year-over-year increase of 4.7%.
Price Performance In the past three months, shares of TotalEnergies have lost 2% compared with the industry's 7.7% decline.
Image Source: Zacks Investment Research
Zacks Rank The company currently has a Zacks Rank #3 (Hold).
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