Tellurian says Shell, Vitol LNG supply deals terminated

US LNG firm Tellurian, the developer of the Driftwood LNG export project in Louisiana, said on Friday that its LNG supply deals with Shell and Vitol were both canceled.

Tellurian signed last year a 10-year deal with a unit of Shell to supply the latter with 3 million tonnes per annum on a free on board (FOB) basis from its Driftwood project.

The firm said in a filling with the US SEC on Friday it has received a notice of termination from Shell NA LNG with respect to the LNG sale and purchase agreements 1 and 2 between Driftwood LNG and Shell, each dated as of July 29, 2021.

Moreover, Tellurian said it has delivered a notice of termination to Vitol on Friday regarding the LNG sale and purchase agreement, dated as of June 2, 2021, by and between Driftwood LNG and Vitol.

Tellurian signed a 10-year deal worth about $12 billion in June last year with trader Vitol to supply 3 million tonnes per annum on a free on board (FOB) basis.

The Driftwood LNG developer did not provide any additional information regarding the termination of these contracts.

Besides these deals, Tellurian also previously signed a 10-year contract with Gunvor.

Tellurian’s co-founder and executive chairman, Charif Souki, recently said that the company would focus on finding equity partners for its Driftwood LNG export project after it withdrew a senior notes offering.

Due to uncertain conditions in the high-yield market, Tellurian withdrew the offering that would allowed the firm to stay on schedule to deliver LNG from Driftwood in the first half of 2026.

Following withdrawal of the offering, this puts the Driftwood LNG export project “in jeopardy to deliver gas on the schedule that we were hoping to stay to,” Souki said.

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 million tonnes per annum (mtpa).

In March, Tellurian issued a limited notice to proceed to compatriot engineering and construction giant Bechtel under its executed EPC contract to begin construction of phase one of the Driftwood LNG plant.

Updated strategy

Tellurian said in a statement later on Friday it has updated its Driftwood LNG financing strategy to prioritize securing equity partners.

“Part of this strategy includes introducing flexibility in its liquefied natural gas portfolio with the termination of two current sales and purchase agreements,” it said.

President and CEO Octávio Simões said in the statement that “the potential corporate and strategic partners we are seeking may want LNG volumes that they can sell globally and now we have some capacity to offer that option.”

“We have made good progress on our construction plan and will continue funding that with our cash and operating cash flow,” he said.

“What has not changed for Tellurian is that we are an operating natural gas producer with revenue from our gas sales,” Simões said.

“Currently we have 11 natural gas wells in various stages of completion and therefore expect a significant increase in production and sales next quarter. In addition, we will add to our value when our fully permitted Driftwood LNG project is completed, and we can reach the global markets with LNG sales at global prices,” he added.

(Article updated to include a statement by Tellurian.)

- Advertisements -

Most Popular

Excelerate to splash about $332 million on FSRU order in South Korea

Excelerate Energy will pay about $332 million for a floating storage and regasification unit (FSRU) it ordered at South...

Germany’s EnBW to buy more LNG from Venture Global

US LNG exporter Venture Global LNG has signed a deal to provide more liquefied natural gas to German energy...

Finland’s Hamina LNG terminal starts commercial ops

Hamina LNG has launched commercial operations at its liquefied natural gas (LNG) import terminal in Finland’s Hamina port. The LNG...

More News Like This

European LNG fueling network continues to expand

European network of liquefied natural gas (LNG) fueling stations continues to grow despite very high prices and is nearing...

Japan’s Inpex inks Abadi LNG deal with Indonesia’s PLN

Japan’s Inpex said it had signed a new memorandum of understanding with Indonesia’s state power company PLN regarding the...

LNG Canada pipeline almost 75 percent complete

TC Energy’s Coastal GasLink project, which will supply natural gas to the Shell-led LNG Canada export terminal, continues to...

Souki: Tellurian to focus on finding equity partners for Driftwood LNG

Tellurian will now focus on finding equity partners for its Driftwood LNG export project in Louisiana after it withdrew...