Total to buy stake in US LNG group Tellurian

Total SA has agreed to buy 23% of Tellurian Investments Inc. at $5.85/share for $207 million.  

The French multinational firm said the move entails developing an integrated gas project comprising the acquisition of gas production in the US to the delivery of LNG to international markets from the Driftwood LNG terminal.

Meg Gentle, Tellurian president and chief executive officer, 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, La.”

Gentle, formerly of Cheniere Energy Inc., joins former Cheniere Chairman, Chief Executive, and President Charif Souki at the newly established firm.

Driftwood LNG is in the engineering design and prefiling phase of the project. The US Federal Energy Regulatory Commission approved its prefiling request in June. Tellurian expects to commence construction in 2018 and produce LNG in 2022. The terminal will be able to export up to 26 million tonnes/year of LNG.

Giles Farrer, research director, global LNG, at global natural resources consultancy Wood Mackenzie Ltd., commented on the deal, "Total acquiring a 23% stake in Tellurian and yesterday's announcement that BP [PLC] has farmed into a near-shore [floating LNG] 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 Dec. 19 said it will invest nearly $1 billion to team with Kosmos Energy Ltd. for exploration and development of six blocks off West Africa (OGJ Online, Dec. 19, 2016). That deal includes Mauritania’s offshore Tortue field, where the new partners plan to process and transport gas at a nearshore LNG facility.

"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. "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."

He 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 [and] then helps mature them."

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