Tellurian Inc said it signed a $7.5bn agreement for India’s Petronet LNG to buy into its proposed liquefied natural gas terminal in Louisiana, in what could potentially be one of the largest foreign investments in the US to ship shale gas abroad.
Petronet will spend $2.5bn for an 18% equity stake in the $28bn Driftwood LNG terminal – the largest outside holding so far in the project – and negotiate the purchase of 5mn tonnes of gas per annum. The remainder of the total will come from debt, Tellurian chief executive officer Meg Gentle said.
The companies plan to complete the accord by March 31, by which time Tellurian hopes to have signed up partners to enable it to proceed with the project.
“We will sign the document sometime in the first quarter and we will have financing ready to close simultaneously, and then we will begin construction,” Gentle said in a telephone interview.
“India is one of the fastest growth markets for LNG and should soon become the second-largest LNG importer.” The deal, signed in Houston in the presence of Indian Prime Minister Narendra Modi, underscores a record year for the LNG industry, with tens of billions of dollars’ worth of export projects given the green light.
The surge of new supply from America’s trove of shale gas has rendered the once-premium fuel accessible for emerging markets such as India, currently the sixth-largest buyer of US LNG.
“People should not be surprised this came,” said Tellurian co-founder Charif Souki, who also started America’s largest LNG exporter Cheniere Energy Inc.
“The US and India have a significant issue diametrically opposed. We have too much gas that we don’t know what to do with and India needs greater gas, and 1mn tons a time is not going to solve the problem.”
The Petronet deal, the largest by an Indian company in US LNG, comes days after the gas industry’s all-important GasTech conference and coincides with Modi’s much-anticipated visit to Texas.
“This deal will further help diversify India’s energy supplies,” said Lydia Powell, who runs the Centre for Resources Management at the New Delhi-based Observer Research Foundation think tank.
“The US wants to displace Middle East supplies and India is a large market.”
Petronet’s investment is vying to be the largest by a foreign entity with one that Sempra Energy expects to finalise in Texas with Saudi Aramco.
Tellurian expects to finalise the last 4mn tonnes needed for Driftwood’s first phase with one or two partners in the coming months, Gentle said. Petronet’s share represents about $2bn in annual fuel sales for the life of Driftwood, she said.
“It supports the drilling industry and the pipeline industry, and there is going to be an enormous amount of resources,” Souki said.
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