France’s Total continues to expand its presence in the LNG sector, with a portfolio projected at 40 mta by 2020. In its latest move, Total has agreed to make a US$500M equity investment and offtake as much as 2.5 mta of LNG from US-based Tellurian’s US$15.2Bn Driftwood LNG export project in Lake Charles, Louisiana.
Under a heads of agreement (HOA) with Tellurian, Total will make the equity investment and purchase 1 mta of LNG from Driftwood LNG. Additionally, the HOA specifies that Tellurian and Total will enter into a sales and purchase agreement (SPA) for a further 1.5 mta of LNG from Tellurian Marketing’s LNG offtake volumes from the proposed Driftwood LNG export terminal. The SPA will be to purchase LNG free on board for a minimum term of 15 years, at a price based on the Platts Japan Korea Marker.
Under a common stock purchase agreement, Total will purchase approximately 19.87M shares of Tellurian common stock for US$200M, subject to certain closing conditions, in particular the Driftwood project FID. Including Total’s original US$207M investment in Tellurian in 2017, Total’s aggregate investment within the Tellurian portfolio will amount to US$907M.
The common stock purchase agreement specifies that Tellurian Marketing will purchase equity interests in Driftwood LNG, which Tellurian intends to fund with private equity financing at the Tellurian Marketing level. Tellurian anticipates the equity interest will represent 2 mta of LNG purchases and that after the 27.6 mta Driftwood LNG terminal is constructed, Tellurian Marketing will receive about 13.6 mta of LNG from Driftwood.
Tellurian president and chief executive Meg Gentle said “We look forward to consistently delivering on our development plan for Driftwood LNG and the integrated network, beginning construction of 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.”
Total chairman and chief executive Patrick Pouyanné said “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.”
Driftwood LNG is a proposed 27.6 mta liquefaction export facility that will be located near Lake Charles, Louisiana. Driftwood LNG and Driftwood Pipeline have received their final environmental impact statement and are expected to begin construction this year, deliver first LNG in 2023 with full operations in 2026.