Oil & Gas

Patrick Pouyanné, CEO of TotalEnergies, has become accustomed to navigating difficult situations in emerging markets. The French energy giant’s CEO was one of the few Western executives to attend Saudi Arabia’s Future Investment Initiative in 2018, just after the murder of journalist Jamal Khashoggi, and he took his time to extricate the company from Russia following its invasion of Ukraine. However, TotalEnergies' relationship with Indian billionaire Gautam Adani, who is currently embroiled in a U.S. bribery investigation, presents a fresh and uncomfortable challenge for Pouyanné’s leadership. The energy giant’s close ties to Adani have raised concerns, especially as the Indian mogul faces serious accusations involving corrupt dealings and U.S. securities fraud.

The Adani connection dates back to 2018, when TotalEnergies partnered with Adani to develop a liquefied natural gas (LNG) business. Since then, TotalEnergies has expanded its stake in Adani’s ventures, holding 37% of Adani Total Gas and 20% of Adani Green Energy. Adani Green is particularly significant, as it is India’s largest renewable energy player, with over 11 gigawatts (GW) of solar and wind capacity. TotalEnergies further solidified its relationship in 2023 by doubling down on the Adani Green partnership with a new joint venture focused on solar power. However, the situation took a dark turn when U.S. prosecutors charged Adani and his associates with paying $265 million in bribes to Indian government officials between 2020 and 2024 to secure solar power contracts for Adani Green at inflated prices.

Despite the severity of the charges, TotalEnergies’ investors have remained relatively unshaken, possibly seeing this as a different issue than the company’s previous experience with Iran. In 2018, TotalEnergies had to pull out of an Iranian gas project due to the threat of U.S. secondary sanctions. While TotalEnergies has not been accused of any wrongdoing in the Adani case, analysts are concerned about the potential reputational risks and legal implications for the French oil and gas giant. Bernstein analysts have noted that while India represents a small portion of Total’s global capital, it is home to a significant portion of the company’s renewable assets. TotalEnergies’ Indian portfolio includes 6 GW of operational renewable power, and Adani Green’s ambitious 50 GW target by 2030 aligns with Total’s own goal of 100 GW of renewable energy capacity by the same year.

TotalEnergies has acknowledged the risks associated with its partnerships in India, particularly with Adani Green. In a statement following the announcement of new collaborations in 2023, the company flagged the potential for profitability losses, litigation costs, and reputational damage if it fails to choose high-quality partners or properly manage its existing partnerships. The growing legal cloud surrounding Adani could also threaten TotalEnergies’ 10% return on capital employed from its renewable energy ventures in India. While Pouyanné may not be facing a crisis on the scale of the company’s exit from Iran, the bribery allegations against Adani represent a significant emerging market headache that could have lasting consequences for TotalEnergies' global renewable ambitions.