Petronet LNG Ltd, India's biggest liquefied natural gas importer, has signed a preliminary deal to buy a stake in Tellurian Inc's proposed Driftwood project in Louisiana and import 5 million tonnes a year of LNG.

The deal is worth about USD 2.5 billion, sources privy to the development said.

"Tellurian Inc. And Petronet LNG Ltd announced (September 21) that the two companies have signed a Memorandum of Understanding (MOU) wherein Petronet and its affiliates intend to negotiate the purchase of up to five million tonnes per annum (5 mtpa) of liquefied natural gas (LNG) from Driftwood, concurrent with its equity investment, which remains subject to further due diligence and approval of its board of directors," the US firm said in a statement.

Tellurian and Petronet will endeavour to finalise the transaction agreements by March 31 2020, it said.

The firm's President and CEO Meg Gentle said, "Petronet, India's largest LNG importer, will be able to deliver clean, low-cost, and reliable natural gas to India from Driftwood."

The Driftwood project includes natural gas production, gathering, processing, and transportation facilities, along with Driftwood LNG, a proposed 27.6 mtpa liquefaction export facility that will be located near Lake Charles, Louisiana on the US Gulf Coast.

In April, the US Federal Energy Regulatory Commission (FERC) issued the order granting authorisation for Driftwood LNG and the 96-mile Driftwood Pipeline, which will inter-connect the LNG terminal to the US natural gas market.

Petronet and Tellurian had first signed a broader agreement in February.

India is targeting to raise share of natural gas in its energy basket to 15 per cent by 2030 from 6.2 per cent currently and is expanding its pipeline network and building new LNG import terminals to encourage use of the cleaner fuel.

Tellurian is offering an equity interest in Driftwood Holdings, which comprises Tellurian's upstream company, its pipeline and the upcoming terminal in return for commitment to offtake gas.

At present, state-owned GAIL India Ltd has 20-year LNG contracts to buy 5.8 million tonnes per year of US LNG, split between Dominion Energy Inc's Cove Point plant and Cheniere Energy Inc's Sabine Pass facility in Louisiana.