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Freeport LNG secures financing

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LNG Industry,

Freeport LNG has announced that its subsidiaries, FLNG Liquefaction LLC and FLNG Liquefaction 2 LLC, have successfully closed on debt and equity financing commitments of approximately US$ 11 billion in capital required for the development of the initial two trains of Freeport LNG’s natural gas liquefaction and LNG loading facility on Quintana Island near Freeport, Texas. The commitments are in excess of the anticipated US $9.64 billion in project costs, inclusive of financing costs, and provide a significant buffer for contingencies and cost overruns.

Freeport LNG has now completed all milestones and has issued a full notice for CB&I Inc. and Zachry Industrial Inc. to construct the first two liquefaction trains of the liquefaction project.

Liquefaction trains

The first liquefaction train is expected to start operations in third quarter 2018, with the second liquefaction train expected to commence operations five months thereafter. Financing and commencement of construction on the third liquefaction train is expected in Q2 2015.

For the first liquefaction train, approximately US$ 4.369 billion in debt financing is being provided by Japan Bank for International Cooperation (JBIC) and the following six commercial banks: The Bank of Tokyo-Mitsubishi UFJ Ltd; Sumitomo Mitsui Banking Corp.; Mizuho Bank Ltd; Sumitomo Mitsui Trust Bank Ltd; Mitsubishi UFJ Trust and Banking Corp.; and ING Bank N.V., Tokyo Branch.

The portion of the loans financed by the commercial banks is insured by Nippon Export and Investment Insurance (NEXI). Osaka Gas Co. Ltd (Osaka Gas) and Chubu Electric Power Co. Inc. (Chubu Electric) are committed to invest approximately US$ 1.24 billion for the development of the first train.

For the second liquefaction train, approximately US$4.025 billion in debt financing is being provided by a syndicate of 25 commercial banks under a 7-year mini-perm construction facility. IFM Investors is committed to invest approximately US$ 1.3 billion in equity for the development of the second train.

Michael S. Smith, Chief Executive Officer, Freeport LNG, said: “We are excited to bring together a diverse group of the world’s most sophisticated investors, lenders, LNG industry participants, and governmental institutions to support the advancement of the Freeport LNG liquefaction project, and look forward to completing a successful construction of the initial two trains and beginning commercial exports in 2018.

“The project will drive substantial economic growth in Texas and across the [US], requiring a peak construction workforce of over 4000 workers and 300 new full-time workers at the facility once in operation. In addition, an estimated [25 000] – 30 000 permanent new jobs will be generated upstream of the project to support the increased natural gas exploration, production and infrastructure development required to meet the project’s supply demands. Exports from the Freeport LNG project offer substantial geopolitical benefits as well, providing secure energy supplies to our key allies around the world and resulting in more than a 1% reduction in the US trade deficit.”

Final approvals

Earlier this month, Freeport LNG received final approvals for its proposed LNG export facility from the US Federal Energy Regulatory Commission (FERC) and the US Department of Energy (DOE). With these approvals, Freeport LNG has received all authorisations required for construction of the initial three-train liquefaction project and the export of the entire contracted LNG production volume of the initial three trains.

Macquarie Capital is serving as Freeport LNG’s sole financial advisor with respect to the financing for the project.

Adapted from press release by

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