US Freeport LNG makes final investment on Train 3

The 13.2mtpa Freeport LNG project in south Texas has closed on the financing for its third train at the three-train complex, the developer announced on 28 April. Start up is expected by August 2019.

The $4.56bn in financing commitments were reached on the 4.4mtpa Train 3 with the total construction cost for the liquefaction complex anticipated to be $12.5bn, including owner’s costs and interest.

This marks the first sanctioning of a US LNG export train this year, beating out expectations for the proposed trains 1 and 2 of the planned 13.5mtpa greenfield Corpus Christi LNG project, which has awaited some final permits from the US Federal Energy Regulatory Commission (FERC).

Freeport LNG has received its export licences from the US Department of Energy (DOE) to sell to non-free trade agreement (non-FTA) nations, which include major importers such as Japan.

Freeport LNG’s volumes are fully contracted, with Japan’s manufacturer Toshiba and South Korean independent SK E&S as the Train 3 offtakers, sharing 2.2mtpa each. UK-based BP has a 4.4mtpa long-term tranche, while Japanese utilities Osaka Gas and Chubu Electric have split another 2.2mtpa from Freeport LNG.

Under the long-term tolling agreement, each of the Freeport LNG offtakers is responsible for sourcing their own gas to lift the volumes on a free-on-board basis and pay Freeport a fixed tolling fee, which was understood to be between $2.25-$2.50/MMBtu at the time that the agreements were signed. Freeport LNG retains 100% equity in Train 3.

About $3.64bn in financing for Train 3 was raised through a syndicate of 27 commercial banks, structured under a seven-year mini-perm construction loan. Another $925m was raised in equity financing, Freeport LNG said.

Another $3bn was raised for other costs associated with the existing import terminal, contingencies, letter of credit facilities and refinancing.

Freeport LNG closed on trains 1 and 2 in November 2014 and began construction on the first phase. First LNG for Trains 1 and 2 is expected in September 2018 and February 2019. ruth.liao@icis.com