Freeport LNG closes financing and commences construction of third natural gas liquefaction train

FLIQ3, a subsidiary of Freeport LNG, has closed US$4.56 billion financing for the third train of Freeport LNG’s natural gas liquefaction and LNG loading facility on Quintana Island near Freeport, Texas.

Approximately $3.64 billion in senior debt financing is being provided by a syndicate of 27 commercial banks under a 7-year mini-perm construction facility. Approximately US$925 million in equity financing for the third train is being provided through mezzanine debt financing. Freeport LNG will retain 100% equity ownership in FLIQ3 and the third liquefaction train.

FLIQ3 has entered into 20-year liquefaction tolling agreements totaling 4.4 million tonnes per annum with SK E&S LNG, LLC and Toshiba Corp.

With closing on financing, Freeport LNG has completed all milestones and issued a full notice to proceed to CB&I, Inc., Zachry Industrial, Inc. and Chiyoda International Corporation to construct the third train.

Full three-train operation is expected by the third quarter of 2019. LNG production from the first liquefaction train is expected in early 2018, with commercial operation of the first train expected to commence by the third quarter of 2018.

The first two trains are currently under construction, and are on schedule to commence operations by September 2018 and February 2019, respectively.

Each liquefaction train has a capacity in excess of 5.0 million tonnes per annum. Approximately 13.4 million tonnes per annum of the production capacity of the three liquefaction trains has been contracted under use-or-pay liquefaction tolling agreements with Osaka Gas Co., Ltd., Chubu Electric Power Co., Inc., BP Energy Company, Toshiba Corp. and SK E&S LNG, LLC.

In November 2014, Freeport LNG received final approvals for its proposed 3-train natural gas liquefaction and LNG export facility from the U.S. Federal Energy Regulatory Commission (FERC) and the U.S. Department of Energy (DOE).

The construction cost for the combined three-train project is expected to be US$12.5 billion.

Macquarie Capital is serving as Freeport LNG’s sole financial advisor with respect to the financing for the project. White & Case is serving as Freeport LNG’s finance counsel. Twenty-seven of the world's foremost project finance and investment banks are lending to the project and Chadbourne & Parke served as lenders' counsel. Akin Gump Strauss Hauer & Feld represented SK E&S in the transaction. Toshiba Corp. is represented by Norton Rose Fulbright