Total is acquiring a $207 million stake in Tellurian Investments Inc. (Tellurian) to develop an integrated gas project, the companies said on Tuesday.
The acquisition in Tellurian, a private company developing natural gas liquefaction export projects, is aimed at forming competitive gas production in the US to the delivery of LNG to international markets from the Driftwood LNG terminal. Total will acquire a 23 percent stake at $5.85 per share, the French major said in a statement.
“Total’s investment materially strengthens Tellurian’s position as a large infrastructure development company and is an important milestone in the growth of Tellurian’s LNG business, including the Driftwood LNG project in Calcasieu Parish, Louisiana,” Tellurian president and CEO Meg Gentle said. “We look forward to delivering low cost LNG to the global market.”
Total President of Gas, Renewables and Power Philippe Sauquet said, “Tellurian… has a very experienced team with a strong track record of developing and managing LNG assets in the US. Investing in Tellurian at an early stage will give us the opportunity to potentially strengthen our mid and long term LNG portfolio thanks to a very cost competitive project.”
Driftwood LNG is in the engineering design and pre-filing phase of the project. The Federal Energy Regulatory Commission (FERC) approved Driftwood LNG’s pre-filing request on June 6, 2016. Tellurian expects to commence construction of Driftwood LNG in 2018 and produce LNG in 2022.
Giles Farrer, Research Director, Global LNG, at global natural resources consultancy Wood Mackenzie said: "Total acquiring a 23 per cent stake in Tellurian and yesterday's announcement that BP has farmed into a near-shore FLNG project in Mauritania and Senegal is a sign that a technological shift is under way – the majors are going big on small-scale LNG.”
BP on Monday said it signed agreements with Kosmos Energy to acquire a 62 per cent working interest, including operatorship, of Kosmos’ exploration blocks in Mauritania and a 32.49 per cent effective working interest in Kosmos’ Senegal exploration blocks.
"The jury is still out on whether small-scale LNG is really cheaper per tonne of LNG produced than large scale, but it's certainly a more manageable investment and that’s appealing in the present environment,” Farrer said. "For Tellurian, with no project under development, it’s a big endorsement and shows that their leadership can do the deals to meet its ambitions. As one of the big LNG portfolio players, Total can add both financial clout and could support the development of some of the trains by buying LNG from the project."