Algorithms for deriving Soil Moisture and Evapotranspiration from data of the new METEOSAT Second Generation (MSG) satellites are being developed within the EUMETSAT Land SAF. The input data are mainldy based on MSG, while auxiliary meteorological data from the European Centre for Medium-Range Weather Forecasts (ECMWF) are foreseen to be used. This contribution to the Proceedings of the Land SAF Training Workshop (Lisbon, 8-10 July 2002) describes the background and algorithms around the basic concepts of the Soil-Vegetation-Atmosphere-Transfer (SVAT) model TESSEL (Tiled ECMWF Surface Scheme of Exchange processes at the Land surface). A separate contribution deals with the results of comparisons with in situ observations.