Total and Tellurian have signed a series of agreements strengthening the partnership between the two companies to develop the Driftwood LNG project located in Louisiana, US. The agreements include a Heads of Agreement (HoA) upon which Total will invest in Driftwood Holdings and will offtake 2.5 million tpy of LNG.
The HOA stated Total will make a US$500 million equity investment in the Driftwood LNG and purchase 1 million tpy of LNG from the proposed project. Furthermore, 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 Driftwood project. 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).
The second agreement concluded that Total will purchase around 20 million shares of Tellurian common stock for an amount of US$200 million. The agreements are subject to the relevant regulatory approvals and to the Final Investment Decision (FID) of the Driftwood LNG project.
“These agreements increase our commitment to Driftwood LNG, a highly cost-competitive project that benefits from low production costs and prices in the US. In line with our strategy to become a major LNG portfolio player, this transaction will add 2.5 million tpy of competitive US LNG to Total’s portfolio and strengthen our positions in the US”, outlined Patrick Pouyanné, Chairman and CEO of Total. “As a strategic partner of Tellurian, we are confident to further invest in the company and become an investor and a customer of Driftwood LNG.”
Driftwood LNG is an integrated LNG project that includes building gas pipelines from gas producing areas in Texas and a low cost modular concept liquefaction plant with a capacity of 16.6 million tpy (Phase 1) and a possibility of increase to 27.6 million tpy.
Total has been a shareholder of Tellurian since 2017, after the Group acquired approximately 46 million shares of Tellurian for an amount of US$207 million.
Read the article online at: https://www.hydrocarbonengineering.com/gas-processing/03042019/total-further-commits-to-tellurian-led-us-based-driftwood-lng-project/