US-based liquefied natural gas (LNG) company Tellurian has signed a binding letter of intent to sell approximately 800 acres of land in Louisiana for $1bn.
Tellurian did not disclose the name of the buyer, who is said to be a New York-based institutional investor with $120bn in assets under management (AUM).
The land being sold was for Tellurian’s proposed Driftwood LNG export project and following the sale the company plans to lease it for 40 years.
The leaseback’s conditions include, among other things, an 8.75% capitalisation rate, 3% annual rent increases, and the need for Tellurian’s equity partners to serve as guarantors of the master lease.
The Driftwood liquefied natural gas plant would be spread across 1,200 acres of land on Calcasieu River’s west bank and south of Lake Charles.
When completed, the plant is expected to produce 27.6 million tonnes per annum (mtpa) of LNG.
The development comes after Shell terminated its agreement to buy LNG from Driftwood in September last year.
In June 2021, Shell NA LNG signed a ten-year deal to purchase three mtpa of LNG from Tellurian’s Louisiana project.
Shell ended the agreement after Tellurian gave global energy trader Vitol notice that their separate Driftwood LNG partnership was coming to an end.
Now, Tellurian is left with only one LNG supply deal intact with Gunvor Group.
The Houston-based firm, which has invested nearly $1bn to develop the site, is looking for equity partners to help finance the project.
Capital raised from any land sales is expected to be used to fund the Driftwood LNG project.