LNG

Venture Global LNG Inc., the US liquefied natural gas developer involved in a dispute with many customers regarding the non-delivery of post-commissioning cargoes from the Calcasieu Pass project in Louisiana, plans to acquire nine LNG carriers to expand its worldwide sales especially of spot shipments.

Venture Global LNG has told the US Federal Energy Regulatory Commission (FERC) that it could not meet contracts to provide cargoes from the Calcasieu Pass export plant in Louisiana to major customers because the facility was not yet ready to meet three criteria in the sales and purchase agreements.

Dec 28 (LNGJ) - Chatterjee Fund Management (CFM), the private equity firm with offices in New York, has increased shareholdings in US LNG plant developer Tellurian Inc. and its proposed Driftwood LNG plant in Louisiana. A filing by Tellurian with the US Securities and Exchange Commission showed that Chatterjee raised its stake to 7.3 percent from 5.2 percent previously. Tellurian’s shares on the American list of the New York Stock Exchange rose by 7.55 percent after the announcement to $0.95 per share.

   The Chatterjee firm was founded in 1989 by Purnendu Chatterjee, a former investment adviser to the Quantum Group of Funds and a former partner to consultants McKinsey & Company Inc. Tellurian said that from late December CFM acquired 9.84 million shares and a Marshall Islands-registered Chatterjee fund LVS bought 3.17M shares so that CFM now owns 28.52M shares and LVS has 17.63M shares. “Therefore, CFM and Dr Chatterjee may be deemed to beneficially own 46.16M shares, which represents approximately 7.3 percent of outstanding shares,” Tellurian said.

Tellurian Inc., the developer of the Driftwood liquefied natural gas export plant near Lake Charles in Louisiana, increased third-quarter natural gas production and revenues as it continued to progress with the financing of the venture and discussions with counterparties for offtake and equity.

Tellurian produced 19.5 billion cubic feet of natural gas for the quarter to the end of September compared with 11.4 Bcf for the same period of 2022.

The Houston-based company’s natural gas assets included 31,149 net acres and interests in 159 producing wells.

Its main production area of operations is the Haynesville Basin covering northwest Louisiana and East Texas.

Tellurian posted a loss of $12.55 million in the quarter compared with a profit $40.07M in the same quarter of 2022.

For the nine months the losses came to $44.23M versus a profit of $83.17M in the prior-year period.

Revenues

Tellurian generated around $43.2M in revenues from natural gas sales in the third quarter compared with $81.1M in the third quarter of 2022, a change driven by decreased realized natural gas prices partially offset by increased production volumes.

Tellurian reported a net loss of approximately $65.4M, or $0.12 per share (basic and diluted), for the quarter compared with a net loss of about $14.2M, or $0.03 per share (basic and diluted), for the same period of 2022.

As of the end of September, Tellurian said it had approximately $1.3Bln in total assets, including $59.3M of cash and cash equivalents.

“Tellurian’s upstream segment continues to provide growing natural gas production, improving significantly over the third quarter of last year, and we see natural gas prices on the rise through year end,” said President and Chief Executive Octávio Simões.

“We are having a number of discussions with counterparties for both equity partnership and LNG offtake for the Driftwood project and investment in the Driftwood Line 200/300 pipeline,” Simões explained.

Investments

“We have invested over one billion dollars to develop and advance construction of the fully permitted Driftwood project and remain on target to produce first LNG in 2027,” Simões stated.

The Driftwood project involves constructing 20 mid-scale processing Trains, each with 1.38 MTPA of capacity and built as five blocks of four Trains.

The Phase One development would include the first two of these blocks for 11 MTPA of output and two of three planned 235,000 cubic metres storage tanks and the first of three planned loading berths for LNG carriers.

Tellurian also signed an accord in April 2023 to sell the site of the Driftwood plant to institutional investors for $1Bln and to lease back the site comprising 800 acres of land.

Tellurian’s main contractor for the Driftwood construction is the US engineering company Bechtel Energy.

In September 2023, Tellurian signed an agreement with US LNG-equipment supplier Baker Hughes to secure a delivery schedule for eight LM6000PF+ gas turbines, main refrigerant compressors and control units required for Phase One construction.

Tellurian said the agreement supported its aim of having the Driftwood venture achieved initial LNG production in four years’ time.

Baker Hughes, the US liquefied natural gas equipment-maker and energy services company, posted increased third-quarter revenues and earnings backed by liquefied natural gas and subsea contracts.

Sempra Infrastructure, the subsidiary of California-based utility and energy company Sempra and with stakes in LNG plants and projects in the US and Mexico, has completed the sale of a stake in the Port Arthur LNG project in Texas to US asset management firm Kohlberg Karvis Roberts (KKR), which is already a stakeholder in Sempra Infrastructure.

Sempra said the sale was complete to KKR on a 42 percent indirect, non-controlling interest basis in the Port Arthur LNG Phase 1 project .

The transaction results in Sempra Infrastructure retaining a controlling 28 percent indirect interest in Phase 1 at the project level, and ConocoPhillips owning the remaining 30 percent interest.

“The closing of this transaction continues the positive momentum of our world-class Port Arthur LNG facility and highlights Sempra Infrastructure's ability to access capital to support the growth of its infrastructure business,” said Justin Bird, Chief Executive of Sempra Infrastructure.

“We remain committed to developing energy infrastructure projects with strong partners to continue growing our portfolio while advancing global decarbonization and energy security,” Bird added.

James Cunningham, a Partner at KKR, said the firm was pleased to proceed with the investment.

“Port Arthur LNG Phase 1 has continued its strong momentum and is on track to meet its objectives of helping to deliver energy security, economic growth and a near-term supply of reliable and cleaner energy,” added Cunningham.

Texas FID

Sempra Infrastructure reached a positive final investment decision for Port Arthur LNG Phase 1 in March 2023 and contracted US engineering firm Bechtel Energy to build the facility.

The company has additionally placed major long-lead time orders with equipment and technology companies Air Products and Baker Hughes.

The $13 billion total estimated capital expenditures for the Port Arthur project are being financed with $6.8Bln of non-recourse project-level debt and $6.2Bln of project-level equity.

The company noted that 100 percent of current contractable capacity for Port Arthur Phase 1 had been secured with long-duration contracts and high-quality counterparties.

“The expected commercial operation dates for Train 1 and Train 2 are 2027 and 2028 respectively,” Sempra said.

Progress also continues at Energía Costa Azul LNG Phase 1 on the Pacific Coast of Mexico where construction at the Mexican export project remains on track to reach commercial operations by the summer of 2025.

The San Diego, California-based company is also pursuing a Phase 2 development project at the Cameron LNG export plant in Louisiana. 

Cheniere Energy has signed a long-term liquefied natural gas sale and purchase agreement with the South Korean utility company, Korea Southern Power (KOSPO) for the Sabine Pass expansion project.

Tellurian Inc., the developer of the Driftwood liquefied natural gas LNG export plant near Lake Charles in Louisiana, has given an update of engineering work being carried out by Bechtel Energy and costs per tonne of LNG.

Mitsui & Co. of Japan, a leading liquefied natural gas market participant and trader, confirmed the acquisition of shale-gas assets in South Texas with access to LNG export plants on the US Gulf Coast.

Mitsui said it purchased a 92 percent working interest in the Eagle Ford basin assets from a subsidiary of Silver Hill Energy Partners, a private company based in Dallas, Texas.

The assets comprise 8,500 net acres known as the Hawkville field and with easy reach of the region’s LNG export cluster.

The confirmation statement from Mitsui on the acquistion did not include a value for the transaction.

“Additional gas production is expected from this asset with further development,” said the company.

The Eagle Ford acreage will be managed by a company subsidiary, Mitsui E&P USA.

“The subsidiary will develop and operate the asset, aiming for stable gas production of over 200 million cubic feet per day from the field,” Mitsui explained.

Mitsui stated that it was also promoting liquefaction and export of US natural gas to global markets and has methanol production businesses using natural gas as feedstock.

Cameron stake

It has also increased its offtake from the Cameron LNG plant in Louisiana, operated by Sempra Infrastructure, and where the Japanese company has a 16.5 percent shareholding.

However, Mitsui’s LNG assets are global with holdings in the Middle East at liquefaction plants in Qatar, Oman and the United Arab Emirates.

In Asia, Mitsui has an LNG stake in the Tangguh export project in Indonesia and is still a shareholder in the Sakhalin LNG plant in the Russian Far East.

It additionally has a stake in the oldest Australian liquefaction plant, the Woodside-operated Northwest Shelf (NWS) plant, and has an impending tolling deal at NWS using feed gas from the onshore Perth Basin in Western Australia.

“In addition to proactively pursuing upstream development projects, we will strengthen the natural gas value chain, including adjacent businesses,” Mitsui stated.

Mitsui said it believed that natural gas and LNG would play an important role as a “pragmatic solution” for the energy transition and it would continue to contribute to the stable supply of energy.

Tellurian Inc. has signed an accord to sell the site of the proposed Driftwood liquefied natural gas plant in Lake Charles in Louisiana to a New York-based institutional investor.

Tellurian said in a stock exchange filing that the sale and lease back deal has been the subject of a binding letter of intent for the 800 acres of land owned by Tellurian’s subsidiary, Driftwood LNG LLC.

The agreement with the unnamed investment firm with $120 billion in assets under management will see Tellurian receiving $1 billion for the land and a lease.

“It will consist of the sale by Driftwood LNG and purchase by a special purpose entity to be formed by the investor of Driftwood LNG’s interests in the property for $1.0Bln pursuant to a purchase and sale agreement,” said Tellurian.

On the closing of the transaction a 40-year lease of the property from the purchaser to Driftwood LNG will be signed in the form of a master lease.

The terms of the master lease will include, among other requirements, a capitalization rate of 8.75 percent and annual rent escalators of 3.00 percent as well as a requirement that Driftwood LNG posts a letter of credit equal to 12 months of rent.

Guarantors

There is also a requirement that the equity investors in Driftwood LNG become joint and contingent guarantors of the master lease.

“The master lease contingent guarantors are also required to hold an investment grade rating of BBB or higher or attain an equivalent shadow credit rating, or be otherwise acceptable to the purchaser,” noted Tellurian in its filing.

The Houston-based company is quoted on the American list of the New York Stock Exchange.

The accord contemplates that the parties will use “commercially reasonable efforts” to finalize the purchase agreement and master lease on or before July 14, 2023.

“The LOI will terminate on July 14, 2023 if Driftwood LNG fails to identify the contingent guarantors by such date and will terminate on July 31,” it said.

The satisfaction of the closing conditions in the purchase agreement also including Driftwood LNG securing financing commitments for Phase One of the LNG export project.

Leading US LNG engineering company Bechtel Energy has already been given limited notice to proceed with construction of Phase One of the Driftwood liquefaction plant.

The Tellurian project involves constructing 20 mid-scale processing Trains, each with 1.38 MTPA of capacity and built as five blocks of four Trains.

The Phase One development would include the first two of these blocks with 11 MTPA of output and two of three planned 235,000 cubic metres storage tanks and the first of three planned loading berths for LNG carriers.