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French Oil Giant Total places $1.73Bn Bet on buying Utility Company

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Published on : Apr 19, 2018

The shift in the energy sector to adopt low-carbon energy assets is creating shake-ups in the traditional oil and gas industry, especially in emerging and developed markets. Amid this unstoppable trend, a number of oil and gas firms in Europe are investing in diverse energy businesses with an aim to offer cleaner energy to its customers. To this end, several energy giants have entered into deals with producers of wind and solar power in countries such as the U.K., Norway, and France. Total S.A., the French energy giant announced on April 18, 2018 that it has entered into a deal to buy a majority stake in French electricity utility company Direct Energie in a 1.4 Bn euros ( or US$1.73 Bn).

The deal marks a notable shift the French energy behemoth is making. Total is prominently engaged in producing oil and natural gas and has been garnering huge profits from the traditional business. However, the company is putting small bets on clean energy technologies to stay relevant.

Total to Ramp up Share of Low-Carbon Energy to 20% and gain Firm Foothold in Renewable Energy Market

Direct Energie has major presence in Belgium and France and its board has approved Total’s acquisition of three quarters of its capital under the pact. The deal is inspired by the Total’s vision to augment its clean energy assets to 20 % of total energy assets by 2035 end, which will broadly consolidate its hold over gas-electricity value chain. With this move, the French oil giant intends to put a tough competition to EDF Energy, which holds a considerable clout in the residential power market.

Investing in Renewables by European Energy Giants Inspired by Similar Motives

Several other energy giants have made similar moves in the recent months to get a foothold in the clean energy market. Royal Dutch Shell in February this year agreed to buy First Utility, a prominent supplier of gas and electricity in the U.K. The British–Dutch multinational oil and gas firm also acquired a solar power company in the U.K. In a similar development, country oil major BP plc in December 2017 inked a pact with Lightsource, a British company specializing in large-scale solar projects.