India's Petronet has signed on as an equity partner for the planned Driftwood liquefied natural gas project in Louisiana being developed by US startup Tellurian.
Under a memorandum of understanding signed in Houston on Saturday in the presence of Indian Prime Minister Narendra Modi, Petronet also intends to negotiate the purchase of up to five million tonnes per annum of LNG from the Driftwood facility "concurrent" with its equity investment. Financial details on the deal were undisclosed, but Reuters pegged the investment at $2.5 billion.
The deal is expected to be finalised by 31 March 2020.
"Petronet, India’s largest LNG importer, will be able to deliver clean, low-cost, and reliable natural gas to India from Driftwood," Gentle said in a release. "Increasing natural gas use will enable India to fuel its impressive economic growth to achieve Prime Minister Modi’s goal of a $5 trillion economy while contributing to a cleaner environment."
Petronet is Tellurian's second announced partner on Driftwood LNG after French supermajor Total, which is to inject a total of $700 million in equity investment. A $500 million portion of the investment relates to the purchase of 1 million tpa from Driftwood LNG and gives Total a 3.6% stake in the project. Using those metrics, Petronet's deal gives in an 18% stake in the project.
A separate sales and purchase agreement (SPA)with Total allows for the purchase of a further 1.5 million tpa from Tellurian Marketing's offtake volumes from the project.
Tellurian has also signed an SPA for 1.5 million tpa with Swiss trading house Vitol.
All the deals relate to the first phase, which involves 16.6 million tonnes per annum of capacity out of a total envisaged at Driftwood of almost 28 million tpa.
Gentle told Upstream last week that she expects to announce the remaining equity partners on the project this year. Tellurian anticipates starting construction on the Driftwood facility next year with first LNG in 2023.
