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Total buys US$207 million stake in Tellurian to back Driftwood LNG

Tue 20 Dec 2016 by Karen Thomas

Total buys US$207 million stake in Tellurian to back Driftwood LNG
Philippe Sauquet: developing and managing US LNG assets. Credit: Fatima Jellaoui

French energy giant Total has taken a 23 per cent stake in Houston-based Tellurian Investments, putting up US$207 million to develop the Louisiana-based Driftwood LNG project.

Total says it will take “approximately 23 per cent of Tellurian at US$5.85 per share” to develop an integrated gas project, from acquisition of US-based gas production to delivering cargoes from Driftwood LNG to customers overseas.

Driftwood LNG is a 26 million tonnes a year (mta) export venture. The project is in its engineering design and pre-filing phase, having secured approval from the Federal Energy Regulatory Commission (FERC) in June for its pre-filing request. Tellurian hopes to start construction in 2018 and to produce its first LNG in 2022.

Today’s announcement is vote of confidence in Tellurian founder Charif Souki, founder of Sabine Pass LNG developer Cheniere and in his bullish vision for US LNG-export growth. It also supports Total’s plan to double its liquefaction capacity to some 20 mta and its LNG-trading portfolio to 20 mta by 2020.

Mr Souki left Cheniere in February following boardroom clashes with his fellow directors. The dispute is said to have centred on Mr Souki’s determination to press ahead with new LNG-export projects, which put him at odds with his colleagues’ more bearish approach.

Mr Souki then founded Tellurian with former BG and Parallax Energy director Martin Houston, to press ahead with the US$6-8 billion Driftwood LNG project. Former Cheniere executive vice-president Meg Gentle joined Tellurian in August, investing US$10 million of her own money in the company.

Total president gas, renewables and power Philippe Sauquet said: “We are happy to join forces with Tellurian, which has a very experienced team with a strong track record developing and managing LNG assets in the US.

“Investing in Tellurian at an early stage will give us the opportunity to strengthen our mid- and long-term LNG portfolio, thanks to a very cost-competitive project.”

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