TIGF gas network seen fetching $2.7bn: sources

PARIS: Bids for Total's TIGF gas network are likely to be close to the lower end of original hopes, around 2 billion euros ($2.7 billion), due to a subdued outlook for gas demand and overcapacity, sources close to the process said.

Firm offers for the French energy group's gas network in southwest France, which had been expected to fetch up to 3 billion euros, are due on Monday.

Total could quickly enter exclusive negotiations with one of the two consortia still in the running and announce a deal when it reports 2012 results on Feb. 13, the sources said.

The sale of TIGF is part of Total's plan to shed 15 to 20 billion euros in assets by 2014 to help it finance investments in other seas, such as exploration, and boost cash flow.

After Spanish firm Enagas withdrew from the race last month, two groups are competing for the gas storage and transport unit. Total declined to comment.

Belgian gas company Fluxys and French state bank Caisse des Depots (CDC) have teamed up with AXA Private Equity, Credit Agricole's Predica insurance unit, CNP Assurances and the Abu Dhabi Investment Authority.

The other group is led by Italian gas transport group Snam , which has teamed up with Singapore's GIC sovereign wealth fund and French power group EDF.

"The initial valuation was made with a lot of estimates. The transport part is easy to value, but little data was available for the storage part and the last figures announced in the sector tended to drag the value down," a source close to the matter said.

GDF Suez unit Storengy recently cut its prices by as much as 30 percent in France because of low demand.

However, another source said TIGF was well positioned in the storage market and benefited from a better pricing position.

Total's efforts to sell TIGF have drawn government scrutiny given the network's status as an employer at a time of high joblessness. Unions oppose the sale and want guarantees on the preservation of the group's headquarters in Pau, in southwestern France, as well as the jobs of its 500 employees.

"Total will be very sensitive to these points, they want a good price but also to have a successful transaction from a political point of view there's a very important image issue," one person close to the deal process said.