French oil giant Total is set to sell its stake in Azerbaijan’s Shah Deniz II gas field. Total currently owns a 10% share in the the Azeri gas field and is the second western oil major to pull out of the project, according to Reuters.
“Total’s strategy is to divest from projects where it has a minority stake and favour those where it is the operator,” one of the sources told Reuters.
A spokesman for Total declined to comment.
A representative of Turkish state pipeline firm Botas confirmed it was in talks to buy Total’s stake in the project. Botas is developing the pipeline section to pump Azeri gas into Turkey and onward towards the European Union.
“The acquisition of a 10 percent stake from Total is commercially profitable,” the representative said.
Analysts said Total’s move was probably a result of lower Russian gas prices, which made investment in expensive new gas sources less attractive.
Russia’s Gazprom has granted price reductions and repayments to customers across Europe, including Germany’s RWE and E.ON, Italy’s ENI and Edison as well as and France’s GDF Suez, in order to make its gas more attractive against rising competition.
At the same time, European gas demand has been weak due to the region’s slow economic growth and to competition from cheaper coal in the power generation sector.
