Houston: Liquefied Natural Gas (LNG) importer Petronet has plans to invest $2.5 billion in American natural gas developer Tellurian in an agreement that will give India access to up to five million tonnes of LNG a year. The announcement came after Prime Minister Narendra Modi had a meeting with the CEOs of top oil companies based in Houston Saturday.
Petronet and Tellurian signed an initial agreement Saturday. Petronet’s investment will entitle them for an 18 per cent equity stake in the $28 billion Driftwood LNG terminal — the largest outside holding so far in the project and will help negotiate the purchase of 5 million tons of gas per annum. The remainder of the total will come from debt, Tellurian CEO 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. The MoU was signed in Houston in the presence of Prime Minister Narendra Modi that underscores a record year for the LNG industry, with billions of dollars worth of export projects being given the green light. India is currently is the sixth-largest buyer of US LNG.
The deal has far-reaching economic ramifications for America as well. US government officials said that the huge investment from India in Tellurian’s $29 billion Driftwood project would create 50,000 direct and indirect jobs in their country and would support manufacturing in 18 American states.
However, senior officials present at the meeting refused to comment on how soon India would be able to consume the amount of LNG the MoU insulated, in order to justify the investment.
In 2011, GAIL, a stakeholder in Petronet had already entered into a 20-year contract to buy 5.8 million tonnes per year of US LNG, split between Dominion Energy and Cheniere Energy, but India has had to resell much of its American intake due to lower demand.
A statement from Tellurian said the Memorandum of Understanding (MoU) was signed in Modi’s presence.”Petronet, India’s largest LNG importer, will be able to deliver clean, low-cost and reliable natural gas to India from Driftwood. 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.
“It is an honour to sign the MoU with Petronet in the presence of Prime Minister Narendra Modi. At Tellurian, we look forward to a long and prosperous partnership with Petronet in the Driftwood project,” Tellurian’s president and CEO Meg Gentle said.
The Driftwood project includes natural gas production, gathering, processing and transportation facilities, along with Driftwood LNG, a proposed 27.6 mtpa liquefaction export facility that will be located near Lake Charles, Louisiana on the US Gulf Coast.