Tellurian gets one month to save Gunvor LNG supply deal

Tellurian, the developer of the Driftwood LNG export project in Louisiana, has one month to meet the conditions of its LNG supply deal with trader Gunvor.

This is the only LNG supply deal Tellurian has for the planned 27.6 mtpa Driftwood LNG project after both of its LNG supply deals with Shell and Vitol were canceled.

Back in May 2021, Tellurian agreed to supply three million tonnes per annum on a free on board (FOB) basis to Gunvor Singapore for a period of 10 years.

Tellurian said at the time that the LNG deal would bring $12 billion in revenue over the 10-year term of the agreement with the supplies indexed to a combination of two indices, the Japan Korea Marker (JKM) and the Dutch Title Transfer Facility (TTF), netted back for transportation charges.

According to a filling with the US SEC, Tellurian and Gunvor Singapore entered into an amendment to the original deal on December 30.

The two firms agreed to extend the conditions precedent deadline from December 31, 2022 to January 31, 2023, but either party may terminate the LNG SPA immediately.

“During the period between December 30, 2022 and January 31, 2023, Driftwood LNG must provide Gunvor with five days’ prior written notice of the date that all of the conditions precedent are satisfied,” Tellurian said in the filling.

Also, the price for any LNG sold under the SPA would now be based only on the Platts Japan Korea Marker index price minus a transportation netback while the force majeure provisions relating to the upstream assets owned or contracted by one or more of Driftwood LNG’s affiliates have been deleted, it said.

Share sale

Besides the deal with Gunvor, Tellurian also entered into a distribution agency agreement with T.R. Winston Equity to sell common shares.

Under the deal, Tellurian said it may sell shares of its common stock, $0.01 par value per share, from time to time on the NYSE American, any other market for the common stock in the US or otherwise permitted by law, through T.R. Winston acting as agent, for aggregate sales proceeds of up to $500 million.

In September, Tellurian withdrew its offering of senior secured notes due to “uncertain conditions in the high-yield market”.

Drfitwood LNG early work continues

Tellurian issued a limited notice to proceed in March last year to compatriot engineering and construction firm Bechtel under its executed EPC contract to begin construction of phase one of the Driftwood LNG plant.

The first phase of the Driftwood project is worth about $12.8 billion.

It includes two LNG plants near Lake Charles with an export capacity of up to 11 mtpa.

According to the latest construction report filed with US FERC, Bechtel and Tellurian continue to progress initial work at the site.

The work includes site preparation, concrete pile driving, offloading of concrete pile shipments, mobilization of construction equipment and tools, concrete crushing activities, concrete foundation activities, and the development of the south berm, Tellurian said in the November update.

Driftwood LNG also continued the construction of the water wells as a non-jurisdictional activity under the early works program, it said.

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