Total will acquire 23% of Tellurian Investments Inc. for $207 million ($5.85 per share) to develop an integrated gas project, from the acquisition of competitive gas production in the US to the delivery of LNG to international markets from the Driftwood LNG terminal.
Tellurian President and CEO Meg Gentle said, “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.”
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.
Houston, TX-based Tellurian is a private company founded in 2016 to develop natural gas liquefaction export projects. Tellurian entered into a merger agreement with Magellan Petroleum Corp. (NASDAQ: MPET) on August 2, 2016, and expects the agreement to close in the first quarter of 2017.
Commenting on the announcement, Giles Farrer, Research Director, Global LNG, at Wood Mackenzie said: "Total acquiring a 23% stake in Tellurian and yesterday's announcement that BP has farmed into a near-shore FLNG project in Mauritania and Senegal isa sign that a technological shift is under way – the majors are going big on small-scale LN.
"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.
"For Tellurian, 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."
Farrer added: "This is a typical Total LNG acquisition. It's built its LNG business on acquisitions over the last few years with deals in Australia and Russia, it buys significant but minority stakes in projects at an early stage then helps mature them."