Tellurian to start Driftwood LNG construction in April, Souki says

US LNG firm Tellurian will start construction on its planned Driftwood project in Louisiana in April, according to the firm’s co-founder and executive chairman, Charif Souki.

“We will start construction in April in earnest and Bechtel will be on the site,” Souki said in a video posted on YouTube on Tuesday.

He said that Tellurian has secured enough capital to, “make sure that we can do the first year’s worth of construction.”

Souki previously said that the LNG firm would award Bechtel notice to proceed with construction in the first quarter of 2022.

Tellurian started preparatory works on the Driftwood site last year and also exercised a long-term site lease.

Tellurian may complete financing by April

“I know people normally want to talk about FID (final investment decision) but it doesn’t apply here,” Souki said.

He said that Tellurian continues to work on derisking the project and putting the financing in place.

The time to work on financing is right due to the surge in gas prices in Europe and Asia, and the need for additional supplies.

Souki said that banks were now willing to consider supporting the project which would have been “impossible” six months ago.

“Timing is everything. Today JKM and Henry Hub are so far apart that the commercial reason for doing a deal like this is very obvious,” he said.

“We’re now in a situation where we have signed non-disclosure agreements with 45 different financial institutions,” Souki said, adding that the company would not “rush” in completing the financing.

He said Tellurian was “very comfortable” with starting the construction program without “being completely sure that the financing will be put in place.”

“The board felt comfortable enough that we will get financing in short order and possibly before we start construction in April,” he said.

Three deals for first phase

Tellurian is developing the 27.6 mtpa Driftwood LNG export project in Louisiana, but it is also working on upstream assets.

The Houston-based firm last year signed three 10-year LNG supply deals for the Driftwood project for a total of 9 mtpa. These include contracts with Gunvor, Vitol as well as Shell.

Tellurian previously said it has sold all the necessary offtake for the first phase of the Driftwood LNG plant which would include two units with a capacity of about 11 mtpa.

Total development costs for this phase would reach about $11.9 billion.

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