Freeport LNG sees loan deal as lift to Train 4 expansion prospects
Houston — Freeport LNG expects to make a final investment decision in the next several months on a proposed fourth liquefaction train at its Texas export facility, after securing a loan of up to approximately $1 billion from an Australian independent investment manager, the operator said Monday.
The development on the expansion front came as the first cargo to be produced at the terminal south of Houston continued its voyage to the Middle East, Platts vessel-tracking data showed. The loan to a unit of Freeport LNG from Westbourne Capital and its investors, together with other bank financing being contemplated, would cover the full cost of building the 5 million mt/year capacity Train 4, the operator said. The company has yet to announce any firm long-term offtake deals tied to the train. A year ago, it announced a preliminary deal, or heads of agreement, with Japan’s Sumitomo for 2.2 million mt/year of capacity from Train 4, though Freeport LNG has yet to say whether that deal has been finalized.
In an emailed statement, CEO Michael Smith said Freeport LNG has “an eye towards FID in the next several months.” He said Westbourne has been an investor in Freeport LNG’s past activities.
The tanker LNG Jurojin departed from Freeport LNG on September 3 with the facility’s first export cargo. On Monday afternoon, the tanker was in the North Atlantic with a captain’s destination set for Egypt’s Port Said, which has sometimes been used as a stopping point en route to other countries in the region, according to Platts trade flow software cFlow.
After the tanker left Texas, the captain’s destination log showed it headed to Jebel Ali, a deepwater port in the United Arab Emirates where Excelerate Energy operates an LNG receiving terminal from a floating storage regasification unit. It could still end up there, based on its current heading for Port Said. A second tanker, Methane Heather Sally, was moored at Freeport LNG on Monday for loading.
The Train 4 project already has its permit certificate from the Federal Energy Regulatory Commission and necessary authorizations from the Department of Energy, as well as a fixed-price engineering, procurement and construction contract with KBR to build the liquefaction unit. Freeport LNG has previously targeted startup of Train 4 for 2023.
According to a market source, the commissioning cargoes from Freeport LNG, including the first one being carried by the Jurojin, are being taken by Shell. The primary long-term buyers of offtake from Freeport LNG Train 1 are Japanese utilities Osaka Gas and Chubu Electric Power, which each control 2.2 million mt/year of capacity.