Total has signed a Heads of Agreement (HoA) with Tellurian for Total to enter a $500 million equity investment in the Driftwood LNG project. The agreement also covers the sale of one million tons per annum (MTPA) of LNG to Total from the Driftwood project. Further, the agreement denotes a Sales and Purchase Agreement (SPA) for 1.5 MTPA of LNG from Tellurian’s Driftwood LNG export facility. The SPA will cover at least 15 years and will be pegged to the Platts Japan Korea Marker (JKM).
The Driftwood project will be in Louisiana and will include natural gas production, processing, transportation and an export facility. The project is expected to kick off operation in 2023 and be fully functioning in 2026.
Total also entered into an agreement to buy $200 million worth of Tellurian’s common stock, about 19.87 million shares. The common stock agreement also outlines that Tellurian Marketing will buy an equity interest in the Driftwood project which is to be funded with private equity financing. The interest is projected to represent about 2 MTPA of LNG. Once the Driftwood facility is operational, Tellurian Marketing will receive approximately 13.6 MTPA of LNG.
Tellurian’s President and CEO, Meg Gentle commented, “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.”
