Tellurian Executive Chairman Charif Souki, whose Driftwood LNG export venture in Louisiana has sold a combined 6 million tonnes per annum of cargoes to global commodities firms Vitol and Gunvor, has disclosed details of the timing of financing arrangements and the start of full construction.
Souki’s latest declarations set a target of the end of the first quarter of 2022 for engineering, procurement and construction (EPC) contract holder Bechtel to have a notice to proceed with full building work.
The Chairman added that Tellurian also expected to be able to announce the banking group that would finance the Driftwood plant by the end of 2021.
While the Driftwood project has permits to construction liquefaction Trains for up to 27.6 million tonnes per annum, the first phase was likely to be much less, between about 10 MTPA and 16 MTPA.
Souki noted that around 65 percent of the expected first-phase capacity had already been sold to Gunvor and Vitol.
He stated that Tellurian was continuing to work on securing more supply deals to cover the remaining capacity for the project's first phase.
In May and June 2021 Tellurian signed 10-year agreements to sell 3 MTPA LNG each to both Vitol and Gunvor.
Tellurian’s SPAs with Vitol and Gunvor are for volumes indexed to a combination of two indices, the Japan-Korea Marker price for spot cargoes and the European benchmark Dutch Title Transfer Facility (TTF), each netted back for transportation charges.
Tellurian said after the deals that at today’s prices, each of the SPAs with Vitol and Gunvor are valued at around $12 billion in revenue over 10 years for the Gulf Coast venture
The project also signed a long-term lease in June 2021 securing the site to build the plant on the west bank of the Calcasieu River, just south of Lake Charles
Tellurian has also said that it wanted to produce all the feed gas needed for the plant and would not sanction the project until it had secured sufficient upstream reserves for the first phase.
Based on its current drilling programme in the Haynesville Shale in northern Louisiana, Tellurian expects to have production by the end of the year, which is three times the volume it was producing at the end of 2020.
Souki said that the company would need to have substantially more drilling, about 1.5 Bcf per day, to reach its goal.