Tellurian Inc. has finalized yet another liquefied natural gas sale and purchase agreement with Royal Dutch Shell after two previous sealed deals with global commodities firms Gunvor and Vitol.
The Shell SPAs are on a free-on-board (FOB) basis at Driftwood LNG for a combination of 3 million tonnes per annum for a 10-year period, indexed with two indices, the Japan Korea Marker (JKM) and the Dutch Title Transfer Facility (TTF), each netted back for transportation charges.
The agreements mark the third deal that Tellurian has finalized in 10 weeks, totalling 9 MTPA and nearly all of the capacity of Driftwood LNG’s first two liquefaction Trains.
“Tellurian welcomes Shell to the Driftwood project,” said Tellurian President and Chief Executive Octávio Simões.
“Shell manages one of the largest and most diverse portfolios of LNG in the world,” he added.
Steve Hill, Executive Vice President of Shell Energy said the deal suited the Anglo-Dutch company as LNG demand was expected 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. We look forward to working with Tellurian,” stated Hill.
The Houston, Texas-based company is moving ahead after signing firm deals in late May and early June 2021 with Gunvor and Vitol for a combined 6 MTPA from the Driftwood plant.
Each of the firm agreements is also for a period of 10 years with the supply indexed to the JKM and Dutch TTF.
Simões said that Tellurian would now focus on financing Driftwood to give US engineering contractor Bechtel notice to proceed with construction in early 2022.
The Driftwood project has permits for production capacity of around 27 MTPA. The plant will be sited on the west bank of the Calcasieu River, just south of Lake Charles.
Tellurian has also filed a formal application with the US Federal Energy Regulatory Commission to build a new 37-mile pipeline in Louisiana that will originate near Ragley in Beauregard Parish and end near Carlyss in Calcasieu Parish, close to where the Driftwood facility will be located.