French energy major to acquire 25% stake in Adani new Industries Ltd. for $12.5 billion.

“Adani and energy supermajor TotalEnergies of France, have entered into a new partnership to jointly create the world’s largest green hydrogen ecosystem. In this strategic alliance, TotalEnergies will acquire a 25% minority interest in Adani New Industries Ltd (ANIL) from Adani Enterprises Ltd (AEL),” said a joint statement by Adani Enterprises and TotalEnergies.

French energy major TotalEnergies will pick up a 25 per cent stake for at least $12.5 billion in the newly launched Adani New Industries Ltd (ANIL) from Adani Enterprises to jointly build a green hydrogen ecosystem. This is the fourth partnership between the two companies with earlier ones focused on LNG terminals, city gas distribution and solar power.

ANIL was incorporated in January this year for steering the new energy and low carbon initiatives of the group. The company, in a regulatory filing earlier this year said, “It will undertake business of developing and operating projects for the synthesis of low carbon fuels and chemicals, generation of low carbon electricity and the manufacture of key components/material for projects including generation of green hydrogen, related downstream products, electricity generation, manufacture of wind turbines.”

Adani New Industries aims to invest over $50 billion over the next 10 years in green hydrogen and associated ecosystems, said a statement by Adani.

“Adani and energy supermajor TotalEnergies of France, have entered into a new partnership to jointly create the world’s largest green hydrogen ecosystem. In this strategic alliance, TotalEnergies will acquire a 25% minority interest in Adani New Industries Ltd (ANIL) from Adani Enterprises Ltd (AEL),” said a joint statement by Adani Enterprises and TotalEnergies.

In the initial phase, Adani New will develop green hydrogen production capacity of 1 million ton per annum before 2030. “The new partnership, centred on green hydrogen, is expected to transform the energy landscape both in India and globally. Both Adani and TotalEnergies are pioneers in energy transition and clean energy adoption, and this joint energy platform further strengthens the public ESG commitments made by both companies,” said the two companies.

TotalEnergies already has a 37.4% stake in Adani Total Gas Ltd. “The strategic value of the Adani-TotalEnergies relationship is immense at both the business level and the ambition level,” said Gautam Adani, Chairman, Adani Group.

“TotalEnergies’ entry into ANIL is a major milestone in implementing our renewable and low carbon hydrogen strategy, where we want to not only decarbonize the hydrogen used in our European refineries by 2030, but also pioneer the mass production of green hydrogen to meet demand, as the market will take off by the end of this decade.” said Patrick Pouyanné, Chairman and CEO of TotalEnergies.

Pouyanné said the new agreement with the Adani Group contributes to the valorization of India’s abundant low-cost renewable power potential. “In our journey to become the largest green hydrogen player in the world, the partnership with TotalEnergies adds several dimensions that include R&D, market reach and an understanding of the end consumer. This fundamentally allows us to shape market demand. This is why I find the continued extension of our partnership to hold such great value. Our confidence in our ability to produce the world’s least expensive electron is what will drive our ability to produce the world’s least expensive green hydrogen. This partnership will open up a number of exciting downstream pathways,” said Adani.

For TotalEnergies, which has been enhancing its focus on clean energy over the past two years, the agreement with Adani could act as a major step in increasing TotalEnergies’ share of new decarbonized molecules including biofuels, biogas, hydrogen, and e-fuels to 25% of its energy production and sales by 2050, according to the French energy giant’s chief.

According to the contours of the partnership, the joint statement by the two companies said that while Adani will provide its expertise in Indian market, rapid execution capabilities, operations excellence and capital management philosophy to the partnership, TotalEnergies will bring its understanding of the global and European market, credit enhancement and financial strength to lower the financing costs, and expertise in underlying technologies..

“ANIL aims to be the largest fully integrated green hydrogen player in the world,” said the two companies, adding that Adani New will have a presence across the entire value chain, from the manufacturing of renewables and green hydrogen equipment (solar panels, wind turbines, electrolysers, etc.), to large scale generation of green hydrogen, to downstream facilities producing green hydrogen derivatives.

The deal marks the largest ever investment by any foreign entity in an Indian energy firm. With its business spread across 130 countries, TotalEnergies emphasises on sustainable development in all its projects. The French energy major recorded a consolidated net income of $5.05 billion in the first quarter of 2022 that ended on 31 March, as against $3.41 billion in the corresponding period of last year. In the first quarter of 2022, TotalEnergies generated cash flows of $11.6 billion.