Integrated oil and gas company TOTAL S.A. (TOT) decided to expand its Asian footprint by making fresh investments in its existing operation in South Korea. TOTAL started an operation in South Korean through a 50/50 joint venture with Samsung in 2003.
The alliance resulted in the creation of Samsung Total Petrochemicals, which looks after the Daesan complex in South Korea. The new investment will be directed towards upgrading as well as creating another aromatics unit and an ethylene-vinyl acetate (EVA) copolymer unit in the complex.
The EVA unit will have a capacity to produce 240,000 metric tons per year of ethylene-vinyl acetate copolymers and the aromatics unit will produce 1 million metric tons of paraxylene and 420,000 metric tons of benzene annually. The project is slated to be completed by September 2014.
The $1.8 billion capital outlay will enable the company to meet increasing demand for these chemicals in Asia. The strategy of the company is to expand its petrochemicals operations in regions where it has a high growth trajectory of demand.
During the third quarter 2011, net income from TOTAL’s Chemical segment declined year over year. The dip in petrochemical margins from Europe and US dragged down results, while it was offset to some extent from the strong performance in Qatar and South Korea units.
TOTAL continues to leverage its solid financial position and expand its operations around the globe. Within a span of a month, the company expanded its presence across three continents. The latest growth spurt is in Asia. Interestingly, the strategy for growth and expansion incorporates all aspects of TOTAL’s business operation.
In US, the company entered into a deal with Chesapeake Energy Corporation (CHK) to mark an entry in the liquids-rich area of the Utica Shale play. In Africa, the company received two exploration licenses, one onshore and the other offshore, from the Mauritanian government to carry out exploration activities in the liquid rich assets. While in Australia, TOTAL teamed up with Japan’s INPEX CORPORATION to invest $34 billion in the Ichthys liquefied natural gas (LNG) project.
TOTAL S.A. currently retains a Zacks #3 Rank, which translates into a short-term Hold rating.
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. The company has exploration and production operations spanning five continents.
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