French energy giant Total SA said on Monday it will buy a 37.4 per cent stake in Indian gas distribution company Adani Gas, as it looks to capitalise on India’s push for cleaner sources of energy.

Total will pay about $866 million for the stake in Adani Gas, which will ramp up its presence in a market that is expected to become the second biggest driver of global demand for liquefied natural gas (LNG) market, after China.

The French company is the third foreign oil major to enter India’s gas sector after BP and Shell. They have come at a time when India is spending heavily to cut its carbon emissions. Prime Minister Narendra Modi has set a target to more than double the share of gas in India’s energy basket to 15 per cent by 2030, while Total has embarked on a series of deals this year to expand its liquefied natural gas (LNG) portfolio.

“Total’s investment in Adani is undoubtedly a show of faith in India’s gas demand growth,” said Nicholas Browne, research director at energy consultancy Wood Mackenzie.

The consultancy firm projects India’s gas demand will double to 75 billion cubic metres by 2030.

It expects LNG to account for half of this demand, or just under 30 million tonnes a year of LNG, equivalent to 10 per cent of today’s global LNG market.

Total will initially buy up to 25.2 per cent in Adani Gas from public shareholders at 149.63 rupees per share, representing an 8.7 per cent premium to the stock’s last close and valuing the stake at 41.47 billion rupees ($585 million). Total will also buy a 12.2 per cent stake from the Adani family, according to a regulatory filing.

After the deal, the Adani family and Total will each hold 37.4 per cent stake in Adani Gas, while public shareholders will own the remaining 25.2 per cent.

Reuters