Tellurian Inc. and Total S.A. have announced that they have signed a Heads of Agreement (HoA) for Total to make a US$500 million equity investment in the integrated Driftwood project and to purchase 1 million tpy of LNG from Driftwood.
In addition, the HoA specifies that Tellurian and Total will enter into a sales and purchase agreement (SPA) for a further 1.5 million tpy of LNG from Tellurian Marketing’s LNG offtake volumes from the proposed Driftwood LNG export terminal. The SPA will be for the purchase of LNG free on board (FOB) for a minimum term of 15-years, at a price based on the Platts Japan Korea Marker (JKM).
Tellurian and Total have also executed a common stock purchase agreement pursuant to which Total will purchase approximately 19.87 million shares of Tellurian common stock for US$200 million, subject to certain closing conditions in particular the Driftwood project FID. Including Total’s original US$207 million investment in Tellurian in 2017, Total’s aggregate investment within the Tellurian portfolio will amount to US$907 million.
The common stock purchase agreement specifies that Tellurian Marketing will purchase equity interests in Driftwood, which Tellurian intends to fund with a private equity financing at the Tellurian Marketing level. Tellurian anticipates that the equity interest will represent 2 million tpy of LNG purchases and that after full construction of the 27.6 million tpy Driftwood LNG terminal, Tellurian Marketing will receive 13.6 million tpy of LNG from Driftwood.
President and CEO Meg Gentle said, “Total is a premier global natural gas production and trading company and will manage a portfolio of 40 million tpy of LNG by 2020. Our partnership with Total began before the inception of Tellurian, when Total endorsed a new business model for US LNG. We look forward to consistently delivering on our development plan for Driftwood LNG and the integrated network, beginning construction on the largest privately funded infrastructure project in the US, and producing low-cost, reliable natural gas as we dedicate LNG to reduce urban pollution and transition to a low-carbon economy.”
Patrick Pouyanné, Total’s Chairman and CEO said, “The cost to produce natural gas in the US continues to fall, as the engine of American innovation finds more efficient ways to apply technology to producing its vast energy resources. The Tellurian team has an established track record of developing and constructing energy infrastructure on time and at the lowest cost. We look forward to joining the Driftwood partnership and continuing to invest in our LNG portfolio to provide flexible, reliable and low-cost LNG to our global customers.”
The Driftwood project includes natural gas production, gathering, processing and transportation facilities, along with Driftwood LNG, a proposed 27.6 million tpy liquefaction export facility that will be located near Lake Charles, Louisiana on the US Gulf Coast. Driftwood LNG and Driftwood Pipeline have received the final Environmental Impact Statement (EIS) and are expected to begin construction this year, deliver first LNG in 2023 with full operations in 2026.
Read the article online at: https://www.lngindustry.com/liquid-natural-gas/03042019/total-and-tellurian-sign-driftwood-lng-hoa/