American Oil and Gas Reporter - January 2015 - 231

Freeport LNG Export Project Financed
HOUSTON-Through subsidiaries
FLNG Liquefaction LLC and FLNG Liquefaction 2 LLC, Freeport LNG Expansion
LP has closed on debt and equity financing
commitments for a liquefied natural gas
export facility the company estimates will
lead to 25,000-30,000 new upstream jobs.
Freeport says the commitments total
$11 billion to develop the initial two
trains of the company's natural gas liquefaction and LNG loading facility on
Quintana Island near Freeport, Tx.
The transaction is the largest fully nonrecourse construction project financing ever,
Freeport notes. The company says commitments in excess of the anticipated $9.64
billion in project costs provide a significant
buffer for contingencies and cost overruns
to ensure successful completion.
With the closing on financing, Freeport
LNG reports it has completed all milestones
and issued a full notice to proceed to
CB&I Inc. and Zachry Industrial Inc. to
construct the first two liquefaction trains
of the Freeport LNG liquefaction project.
The company predicts it will secure financing and commence construction for
the third liquefaction train in the second
quarter. Freeport says the first liquefaction

train is expected to start operations in
third quarter 2018, with the second liquefaction train expected to commence operations five months thereafter.
Each of the three trains has a nameplate
design capacity of 4.64 million tons a
year, Freeport points out. The company
says 13.2 million tons a year of the production, which is equivalent to 1.8 billion
cubic feet of natural gas a day, has been
contracted under use-or-pay tolling agreements with Osaka Gas, Chubu Electric,
BP Energy Co., Toshiba Corp., and SK
E&S LNG LLC.
For the first liquefaction train, Freeport
says, $4.369 billion in debt financing is
being provided by Japan Bank for International Cooperation and six commercial
banks: The Bank of Tokyo-Mitsubishi UFJ
Ltd., Sumitomo Mitsui Banking Corp.,
Mizuho Bank Ltd., Sumitomo Mitsui Trust
Bank Limited, Mitsubishi UFJ Trust and
Banking Corp., and ING Bank NV, Tokyo
Branch. The portion of the loans financed
by the commercial banks is insured by
Nippon Export and Investment Insurance,
the company says, adding that Osaka Gas
Co. Ltd. and Chubu Electric Power Co.
Inc. are committed to invest $1.24 billion

toward developing the first train.
For the second liquefaction train,
Freeport continues, $4.025 billion in debt
financing is being provided by a syndicate
of 25 commercial banks under a sevenyear "miniperm" construction facility.
IFM Investors is committed to invest $1.3
billion in equity for the second train.
"We are excited to bring together a diverse group of the world's most sophisticated investors, lenders, LNG industry
participants and governmental institutions
to support advancing the Freeport LNG
liquefaction project, and look forward to
completing successful construction of the
initial two trains and beginning commercial
exports in 2018," says Michael S. Smith,
Freeport's chief executive officer.
Smith observes the project will drive
substantial economic growth in Texas
and across the United States, requiring a
peak workforce of 4,000 during construction and 300 full-time workers once it is
in operation.
"An estimated 25,000-30,000 permanent new jobs will be generated upstream
to support the overall project supply demand needs," he adds.
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JANUARY 2015 231

American Oil and Gas Reporter - January 2015

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