France's Total and Tellurian signed a series of agreements strengthening the partnership between the two companies to develop the Driftwood LNG project located in Louisiana, U.S.
The Heads of Agreement (HoA) will see Total invest in Driftwood Holdings and will offtake 2.5 Million tons per annum (Mtpa) of LNG.
Total will make a US$500 million equity investment in the Driftwood LNG and purchase 1 Mtpa of LNG from the proposed project. Tellurian and Total will also enter into a sales and purchase agreement (SPA) for a further 1.5 Mtpa of LNG from Tellurian Marketing’s LNG offtake volumes from the Driftwood LNG. 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).
Total will also purchase around 20 million shares of Tellurian common stock for an amount of US$200 million. The French oil giant is has been a shareholder of Tellurian since 2017, after the Group acquired approximately 46 million shares of Tellurian for US$207 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 the low gas 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 Mtpa 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.”
Tellurian president and CEO Meg Gentle said: “Total is a premier global natural gas production and trading company and will manage a portfolio of 40 mtpa of LNG by 2020. Our partnership with Total began before the inception of Tellurian, when Total endorsed a new business model for U.S. 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 U.S., and producing low-cost, reliable natural gas as we dedicate LNG to reduce urban pollution and transition to a low-carbon economy.”
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 Mtpa (Phase 1) and a possibility of increase to 27.6 Mtpa.