Tellurian inks 10-year LNG supply deal with Shell

US LNG export project developer Tellurian has signed a 10-year deal with energy giant Shell to supply liquefied natural gas from its Driftwood project in Louisiana.

Under the sales and purchase agreement, Tellurian would supply three million tonnes per annum on a free on board (FOB) basis to Shell NA LNG, it said in a statement on Thursday.

Moreover, the price will be indexed to a combination of two indices, the Japan Korea Marker (JKM) and the Dutch Title Transfer Facility (TTF), netted back for transportation charges.

This marks the third deal Tellurian announced since May this year following similar contracts with Gunvor, and Vitol.

Combined the two deals represent an aggregate of $24 billion in revenue, Tellurian previously said.

Sales for first two Driftwood plants completed

The three deals total nine mtpa and nearly all of the capacity of Driftwood LNG’s first two plants, Tellurian said on Thursday.

Steve Hill, EVP Shell Energy, said the company expects LNG demand to nearly double by 2040.

“This deal secures additional competitive volumes for our portfolio by the mid-2020s, enabling us to continue providing diverse and flexible LNG supply to our customers,” he said.

“Shell manages one of the largest and most diverse portfolios of LNG in the world, and is leading the industry in delivering CO2e neutral LNG cargoes,” Tellurian’s chief executive Octavio Simoes, said.

“Owing to Driftwood’s integrated project, our ability to accurately measure well to loading arm emissions and reduce emissions where operationally possible, further enables Shell’s CO2e neutral LNG offering,” he said.

Simoes added that Tellurian has now completed the sales to support the launching of the first two plants at Driftwood.

Tellurian would now focus on financing Driftwood, in order to give Bechtel notice to proceed with construction in early 2022, he said.

The Driftwood project has a preliminary $15.5 billion lump-sum turn key engineering, procurement and construction contract with Bechtel.

The firm plans to build the proposed 27.6 mtpa Driftwood project in phases. It previously said the first phase with a capacity of 16.6 mtpa could go online in 2025.

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