China Will Be Profit-Gusher for Total
OREANDA-NEWS. April 23, 2014. China and its energy market are big factors in French oil major Total's long-term plans.
The company recently has struggled with growth, but it could double its liquefied natural gas, or LNG, supply to China in the coming years as it targets a 30% increase in production by 2017.
Last year, Total's sales fell 2% to USD251.73 billion while profits fell 18% to USD 11.21 billion. The company's hydrocarbon production remained flat, at 2.3 million barrels of oil equivalents per day. But Total has forecast daily production of 2.6 million barrels of oil equivalents by 2015 as it tries to satisfy China's ever increasing energy needs.
Over the last 52 weeks, Total's American depositary receipts have risen by 39% to \\$67.74, easily outperforming the S&P 500, which is up 16% in the same period. According to analysts' estimates compiled by Thomson Reuters, Total's revenue could fall further in the current year, to USD 230.3 billion, but the company could start showing improvements in 2015.
On top of that, Total has said that it could potentially produce 3 million barrels of oil equivalents per day by 2017. The company's shares could continue to outperform on the back of this optimism.
Total enjoys a close relationship with Chinese oil companies such as CNOOC, which is also one of the biggest importers of LNG in the world. The two companies have recently signed a new agreement that strengthens their existing partnership.
Moreover, Total is also helping China in meeting its shale gas targets. The company is developing China's shale gas reserves in the Anhui province by partnering with the biggest Chinese oil company China National Petroleum Corp., or CNPC.
With a history of partnerships with Chinese oil companies, Total is in a good position to capitalize on the increasing demand of natural gas in the country
When it comes to LNG, Total is the biggest player in the industry, with annual production of more than 12 million tons. The company has operations in every major LNG market, most of which are located in the Middle East and Asia Pacific.
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